We hosted Shishir Shrivastava, Managing Director of Phoenix Mills, for a deep- dive chat into the DNA of the corporate, its evolution and imaginative and prescient past the seen future. Key takeaways: Company believes its core imaginative and prescient is to create iconic city-centric, mixed-use developments with retail because the core and workplaces and accommodations as complementary belongings. However, submit the pandemic, it’s trying to consider diversification into warehouses and residential belongings by leveraging its land acquisition, retailer relationships and hospitality expertise.
The firm will proceed to deploy capital in new malls somewhat than go for asset-light operatorship roles. They imagine that their skill to take tasks with massive capital infusion, make investments four-year plus gestation time, and give attention to mall curation, and their regular management group set them aside. Partnership with world sovereign funds like CPPIB and GIC not solely provides them entry to funds but additionally insights on world practices which assist enhance efficiency. They reiterated that classes from the previous counsel that they may hold leverage low, companion selectively, and construct larger malls.
Near-term consumption story stays intact: Data from April-May 2022 counsel that consumption is now working at 106-130% for its main malls. We count on PML so as to add two new malls and the growth of its High Street Phoenix mall will seemingly add c28% to its leasable space. This will probably be adopted by addition of one other c23% to its expanded leasable mall space. Beyond this, we count on additional addition in workplace leasable space until FY26e. We conservatively count on the agency to stabilise by FY28e and generate portfolio EBITDA of Rs 28.4 bn from a FY22 exit run-rate degree of Rs 11 bn.
Investment view and valuation: We imagine PML is now set to renew its progress trajectory and seize the upside. Backed by its sturdy stability sheet and companions, we count on PML to profit from distressed acquisition alternatives and create a extra formidable portfolio, which ought to improve its bargaining energy with retailers, scale back particular person asset danger, and, generate larger shareholder returns. We modify our earnings estimates to account for the acquisition of fifty% stake in Chennai Mall and the current consumption traits. We use a DCF-based SOTP method to worth the money flows from belongings utilizing a WACC of 10.5% to reach at our TP as of end-Jun’22 (earlier Mar’22). Our new TP is Rs 1,310 (beforehand Rs 1,250), implying c21% upside; we thus reiterate our Buy score.
Source: www.financialexpress.com”