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Phoenix Mills reports strong Q1FY23 performance with consumption recovery across malls

ICICIdirect Research 16 Aug 2022 DISCLAIMER

What’s Buzzing:

Phoenix Mills (PML) reported a strong operating performance led by strong performance across retail and hospitality assets.

Context:

Reported revenues grew ~181% YoY to Rs 574.4 crore, driven by retail portfolio as retail revenues grew by ~2.5x YoY at Rs 408.6 crore while hospitality revenues were up by 5.4x YoY at Rs 95.9 crore. Retail rental reached Rs 322.4 crore, at ~124% of Q1FY20 (pre-Covid level) and ~113% on a like-to-like basis. Consumption in Q1FY23 was ~123% of Q1FY20 (pre-Covid) and ~111% on a like to like basis. Reported EBITDA margins were up 760 bps QoQ to 56.2%, with operating leverage kicking in. Adjusted PAT at Rs 161.9 crore was up 54.5% QoQ. Most importantly, the momentum in consumption has remained healthy across malls during July 2022 (at 133% of July 2019 and at 121% on like to like basis).

Our Perspective:

The company is focused on core competence in retail malls with addition of malls of ~6 million sq ft (msf) under development over next four to five years to aid growth. Over the medium term, we expect retail rental income to grow at a CAGR of ~16% to Rs 2157 crore in FY20-25E. Furthermore, strong addition pipeline in the commercial segment, which is likely to expand to ~7 msf in three to four years, from 2 msf currently. PML remains a quasi-play on India’s consumption story, given the quality of assets, healthy balance sheet and strategic expansion plans. With only five to six major retail mall developers currently in India, and given its USP of operating large format properties efficiently, PML remains a superior player in the medium to long term.

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