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Mall developer Phoenix Mills Ltd. reported better-than-expected earnings performance on key parameters of revenue and Ebitda (earnings before interest, tax, depreciation and amortization) in the June quarter, which was aided by improving consumption at its malls.

Total consumption in Q1FY23 at 21.90 crore was 123% of pre-covid quarter of Q1FY20. Consequently, incremental revenue share contributed 13% to its total rental income, compared with 10% Q1FY20.

In a post earnings conference call, the management said that in July, consumption at 7.92 crore, was the highest-ever monthly consumption. Under-construction malls in Indore/Ahmedabad/Pune/Bangalore are now pre-leased at 83/98/73/76%, respectively. The company plans to open Indore and Ahmedabad malls in the second half of FY23 and the others in the second half of FY24. The management added that its Project Rise and the Kolkata project have received environmental clearances and are likely to commence operations in FY25-26 and FY26-27 respectively.

Reacting to the earnings that were announced after market hours on Thursday, the stock ended Friday's session up 3.5%. Indian stock exchanges are shut today for a public holiday. 

So far this calendar year, the stock has rallied 35%, handsomely beating sector index Nifty Realty, which has declined around 9.5%. Apart from the timely opening of Phoenix Mills' under-construction malls, investors would also monitor the company's expansion strategy.

The management has said that it plans to venture into warehousing and residential segments. For that, it would incur a capital expenditure of 350 to 450 crore.

"Given strong traction in consumption, captive brownfield mall expansion, addition of office space, consolidation of Chennai Mall and strong business development pipeline we increase our NAV premium from 15% to 25%. We incorporate new office assets as well," analysts at HDFC Securities Ltd said in a report on 12 August. NAV is net asset value.

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