Phoenix Mills Ltd. share price target

Phoenix Mills displayed negative growth in Q4FY25, but its core segments continued to perform well. The company has an ambitious expansion and densification strategy, supported by strong cash flows and a disciplined balance sheet. A strong pipeline of upcoming retail and mixed-use developments across key urban centres is expected to drive robust growth, providing clear visibility on future revenue. This reinforces Phoenix Mills' position as a leading player poised to benefit...

The company reported revenue of INR10.2b, -22%/+4% YoY/QoQ (16% below estimate), while EBITDA came in at INR5.6b, -11%/+1% YoY/QoQ (27% below estimate).

Phoenix Mills (PHNX) posted 2QFY25 revenue of INR9.2b, up 5% YoY (in line). EBITDA stood at INR5.2b, up 2% YoY (6% below est.) as margin contracted143bp YoY.

During the 10-year period from FY14 to FY24, PHNX’s retail portfolio
reported a 12% CAGR in consumption, aided by ~8% like-for-like growth in
existing malls and the launch of new malls in Lucknow, Indore, and
Ahmedabad. Moreover, the company’s retail rental income also witnessed
12% CAGR over the same period, aligning closely with the growth in
consumption.

The Phoenix Mills (PHNX) has clocked a CAGR of 14% in consumption and 13% in retail rental across its mall portfolio over the last decade (FY13-23). Further, LTL consumption base for FY23 across the company’s operational malls was 19% higher than FY20 levels. With the company’s Wakad, Pune having opened in Sep’23 and Hebbal, Bengaluru also expected to open shortly and Indore/Ahmedabad malls having opened in FY23, the focus now shifts to growth from new assets.

The Phoenix Mills (PHNX) clocked Q1FY24 (Apr-Jun’23) like-to-like (LTL) consumption across malls at 109% of Q1FY23 (Apr-Jun’22) levels. Adjusted for store closures in Lifestyle Block of Palladium, Mumbai LTL consumption would have stood at 110% of Q1FY23 levels. As per company, while consumption growth in Jul’23 slowed to 6% owing to monsoon impact in Mumbai, with an expected ramp up in traded occupancies by 3-5% by Q3FY24, LTL growth should trend higher in the festive season and possibly enable the company to achieve double digit LTL consumption growth.

The Phoenix Mills (PHNX) clocked Q1FY24 (Apr-Jun’23) like-to-like (LTL) consumption across malls at 109% of Q1FY23 (Apr-Jun’22) levels. Adjusted for store closures in Lifestyle Block of Palladium, Mumbai LTL consumption would have stood at 110% of Q1FY23 levels.

The Phoenix Mills (PHNX) clocked FY23 like-to-like (LTL) consumption across malls at 119% of FY20 levels while retail income growth was at 122% of FY20 levels.

The Phoenix Mills (PHNX) clocked Mar’23 like-to-like (LTL) consumption across malls at 111% of Mar’19 levels (Mar’20 was first Covid impacted month hence not comparable). However, Mar’23 LTL consumption was at 106% of Mar’22 levels. As we have been highlighting, while the FY23 LTL consumption was expected to range between 13-14% of FY20 (pre-Covid) levels adjusted for Mar’20 mall closures, with a high base of FY23, we model for 5% LTL consumption/rental CAGR from FY24E.

The Phoenix Mills (PHNX) clocked Q3FY23 LTL consumption of Rs23.6bn which stood at 114% of Q3FY20 levels. As per the company, while there were some concerns of a possible demand slowdown in Dec’22, Jan’23 LTL consumption numbers remain strong at 109% of Jan’20 levels.

The Phoenix Mills (PHNX) saw Dec’22 like-to-like (LTL) consumption across malls at Rs8.2bn or 108% of Dec’19 levels. While the Dec’22 LTL growth is lower than the 15% LTL growth seen between Apr-Nov’22, we believe that a high base in Dec’19 (Black Friday sale was in Dec’19 vs. Nov’22 in FY23) has had a marginal impact.