Phoenix Mills shares rise after Motilal Oswal starts coverage with 54% upside
1 min read 21 Mar 2023, 04:45 PM ISTShares of Phoenix Mills settled 2.19 per cent higher at ₹1,323 on the NSE
PremiumShares of the Phoenix Mills Ltd surged a little over 2 per cent after domestic brokerage house Motilal Oswal Securities (MOSL) initiated coverage on the stock with a 'Buy' rating and an increased target price (TP) of ₹1,700, implying a 31 per cent upside potential from its current market price.
While its initial TP is ₹1,700, the brokerage firm said that in case it pushes the valuation base at the end of fiscal 2025, implying two-year returns, taking into account stabilised rental run-rate and no pending capex, the valuation for the retail segment increases to ₹29,000 crore from ₹23,900 crore in a base case scenario. Thus, the price target goes up to ₹2,000, suggesting a 54 per cent upside potential.
Shares of Phoenix Mills settled 2.19 per cent higher at ₹1,323 on the NSE.
“Phoenix opened its 11th mall in Ahmedabad in February 2023 and is on track to deliver the Pune and Bengaluru malls in 1QFY24. With healthy pre-leasing of 90 per cent, its commercial EBITDA (office + retail) is expected to report 34 per cent CAGR over FY23-25," the note said.
The brokerage values operational retail and office assets at a cap rate of 7-9 per cent and upcoming assets using DCF with terminal value calculated on steady state rentals and discounting back to September 2024 at a WACC of 11.7 per cent.
Hotel assets are valued at 15-17.5 times September 24E EBITDA and residential segment on NPV. Healthy pre-leasing of its upcoming malls provides a strong near-term visibility on rental growth, it said.
Key risks, as per the brokerage, include prolonged softness in consumption will negatively impact operational portfolio and can extend stabilisation timelines for new malls. Also, slowdown in leasing demand can derail company’s plan to record steep growth in income from office assets.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
