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The stock of Phoenix Mills Ltd rose around 2% intraday on the NSE on Thursday after the company reported a strong operational performance in 1QFY23 across segments.
In the retail vertical, total consumption in Q1FY23 was Rs2,159 crore, 121% of Q1FY20. Excluding Palassio’s contribution, which opened in July 2020; Q1 FY23 consumption was 109% of Q1 FY20. The month of June witnessed a dip in consumption to Rs690 crore (97% of June 2019) due to renovations of few large spaces and stocking issues by large hypermarket chains. However, retail collections stood at Rs526 crore in Q1 FY23 compared to Rs476 crore in Q4FY22.
In the commercial segment, incremental leasing of 0.15 million square feet in 1QFY23 was the highest ever in 1Q. Hospitality segment also continued to see strong recovery in occupancy with the average room rate metric breaching pre-Covid levels.
According to analysts at Antique Stock Brokers Ltd, with the impact of pandemic fading away, the company has been witnessing consistent recovery in its operational performance and is well on track to further expand its presence in India's consumption hubs. "With the rental structure returning back to pre-Covid levels for all the tenants, medium to long term outlook remains positive for Phoenix Mills," it said in a report.
Given the revival in company's business momentum, analysts at ICICI Securities Ltd expect the company to achieve a 14% rental income CAGR (ex-new Kolkata asset) over FY20-25E, resulting in Rs1,950 crore of rental income in FY25E compared to around Rs1000 crore in FY20. CAGR is short for compounded annual growth rate. "We like Phoenix because it has a strong brand recall and is the market leader in malls across India, has a strong pipeline of projects and is a derivative play on the Indian consumption story," said the ICICI Securities report. That said, the domestic brokerage house cautioned that fresh Covid wave impacting mall consumption and fall in mall occupancy and rental remain key risks.
