Phoenix Mills’ outlook improves as urban consumption revives
Phoenix Mills Ltd is poised to benefit from a combination of favourable factors. Subsiding monsoon, long weekends and upcoming festival season are seen as near-term drivers for urban consumption at malls. This should aid healthy ramp up at the company’s Citadel Indore and Palladium Ahmedabad malls, which were opened in FY23.
“Multiplexes seem to be recovering with a slew of big movie releases in September quarter (Q2FY24), so improving footfalls there would have a multiplier effect on consumpt-ion at malls," said Parikshit Kandpal, vice president, institutional research, HDFC Securities Ltd. So, he expects Pho-enix Mills’ performance in Q2 to be better than June quarter (Q1FY24). On a like-to-like (LTL) basis, the company’s consumption—a key metric—rose 9% year-on-year in Q1FY24.
The company has maintained its 12.5% consumption growth guidance for FY24. Note that its new mall at Wakad, Pune is operational and the one in Hebbal, Bengaluru is likely to open shortly. Improving occupancies at these malls is crucial for the rental income growth and consequently, revenue visibility.
Given the improving outlook, analysts expect the company to see double-digit consumption growth in FY24 thus giving rental income a boost. For instance, analysts at ICICI Securities Ltd are currently factoring-in LTL rental growth of 10% across operational malls for FY24. It is pencilling-in rental income of ₹1,800 crore in FY24, of which ₹370 crore is likely to be from four new malls (Ahmedabad/Indore/Bengaluru/Pune), said the ICICI analysts in a report dated 7 September.
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