Consumption at Phoenix Mills (PML) malls in Q1FY23 stood at Rs 21.6 bn—that is 121% of the pre-Covid Q1FY20 interval (109% on a like-to-like foundation). Retail collections throughout Q1 stood at Rs 5.3 bn (up 10.5% q-o-q). PML can also be witnessing sturdy restoration in occupancy and ARRs in each of its lodges whereas traction in business leasing and residential gross sales can also be on the rise. Consequently, credit score scores for lots of the firm’s SPVs have been upgraded. Our bullish stance on PML stems from its management in malls and an bettering consumption trajectory. We preserve ‘BUY’ with a revised TP of Rs 1,456/share (Rs 1,453 earlier).
Retail consumption crosses pre-Covid degree: Retail consumption in Q1FY23 was 121% of Q1FY20 ranges. Retail assortment for the quarter stood at Rs 5.3 bn (up 10.5% q-o-q). The firm has added ~1.09msf gross leasable space (GLA) over the past three years. Phoenix Palladium noticed addition of ~0.15msf new GLA in the course of the quarter. Many SPVs of the corporate have witnessed a credit standing improve.
Hospitality section recovers strongly: Strong restoration in occupancy and ARRs lifted Q1 income (Rs 772 mn) of the St. Regis lodge to 116% of Q1FY20 ranges (Rs 663 mn). ARRs stood at Rs 11,938 (Rs 10,193 in Q1FY20) with an occupancy of 85% (82% in Q1FY20). Occupancy (66%) and ARRs (Rs 3,602) on the Agra lodge are additionally again to the FY20 ranges in Jun-22.
Commercial and residential demand additionally choosing up: Leasing traction within the business section continues to be sturdy, with Q1FY23 gross leasing at ~0.15msf (highest-ever in any Q1). Gross residential gross sales in the course of the quarter got here in at Rs 704 mn with sturdy gross sales velocity seen within the ready-to-move-in stock. Residential collections stood at Rs 500 mn.
Outlook and valuation: Focus on money move: PML’s management in retail realty and distinctive understanding of the Indian shopper’s psyche coupled with the structural story of city consumption progress has enabled it to climate the Covid-19 storm. Entry in new cities, operationalisation of below building/ deliberate belongings and normalisation of operations are a number of the inventory triggers that we count on to play out over the following few years. Revival in consumption in malls and occupancy in lodges, and liquidation of prepared stock within the housing section are more likely to culminate in strong money flows going forward. We preserve ‘BUY/SN’ with a revised TP of Rs 1,456 (10% premium to Sep-23E based mostly NAV of Rs 1,323).
Source: www.financialexpress.com”