EFC (I) – Small firm with high profitable growth in a sector with positive tailwinds

Business Overview

• Managed office space (57% revenue & 71% PBT)

• Design & Build office (41% revenue & 28% PBT)

• Furniture manufacturing (3.2% revenue and 1.2% PBT)

  
  

Why we invested in EFC (I)

• High growth industry: Catering to flexible workspace segment which is high growth segment

• Demonstrated strong Q-o-Q growth for last 8 Qs

In INR Cr	Jun ‘23	Sep ‘23	Dec ‘23	Mar ‘24	Jun ‘24	Sep ‘24	Dec ‘24	Mar ‘25
Revenue	56	98	172*	93	102	166	177	211
PAT	3	11	17	28	15	29	38	31**

** Includes 17 Cr of minority interest vs. 2.5 Cr, 7.6 & 1 Cr for last 3 Q

• Strong growth engine

  • ~50% increase number of seats to 60,012 in FY25, resulted in strong growth in FY25

  • Strong marquee customer base like TCS, Standrad Chartered, Flipkart, Bajaj Finserv. Consistently adding new clients every quarter

  • 18% RoCE & 21%+ RoE

  • Limited debt (lower than 1x Debt / EBITDA)

    
    

• Expected to continue growth trajectory

  • Strong financials :135 Cr cash flow from operations provide capability to support growth

  • Possibility of further improvement in profitability & returns by backward integration & expansion of furniture business

    
    

• Valuation

  • In FY25 PAT was 112 Cr. PAT increased by 89%

  • As of now, the Company is trading at 3304 Cr making is reasonable priced asset in high growth & profitable segment

• Technical view

Averages are in perfect order. Stock price is rising and price is above rising 50 DMA and 200 DMA

Chart 1 : Moving Averages

Mostly drop from 358 to 171 was first major drop post 2022 reverse listing. It probably marked the end of Wave 2 and stock now well in Wave 3 with breakout imminent above previous highs. 

Key risks to stock price upside

• Small size & market cap

• Limited holding by FII & DII

  
  

Disclaimer

This is not advice to buy stock. The information provided is for discussion and informational purposes only. Please consult a certified financial advisor before making any investment decisions.