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Phoenix Mills may get festive boost

The firm expects mall consumption to continue an upward trajectory on the back of multiplexes opening up

Shares of The Phoenix Mills Ltd are still around 32% away from their pre-covid highs in February. While the September quarter results announced last week show a sequential recovery, the pace is not exciting. Consolidated revenue drop was restricted to 48% year-on-year for the quarter, better than the 78% drop seen in the June quarter.

The company’s retail segment saw a gradual improvement in Q2FY21 with revenue at 45% of the year-ago period. The good news is that consumption patterns across its major malls have seen a noticeable improvement after the September quarter. In October, consumption increased 44% month-on-month. Further, at a portfolio level, the first week of November saw consumption increase to 85% of the same period last year.

This was helped by longer mall operating hours, resumption of food and beverage segment and a pickup owing to the festive season. The company expects mall consumption to continue the upward trajectory on the back of multiplexes opening up and the ongoing festive season.

ICICI Securities Ltd said in a report on 14 November, “While FY21 will be a tough year with an estimated 50% rental income loss, we expect consumption to stabilize heading into FY22E resulting in Phoenix Mills being able to revert to pre-covid minimum guarantee rentals."

As such, a delay in pick-up in malls remains a key risk for the stock.

Meanwhile, the commercial segment revenue was steady last quarter while residential performed better. Understandably, the hospitality segment lagged miserably and is not expected to improve in a hurry.

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