Target: ₹1,645
CMP: ₹1,297.35
The Phoenix Mills clocked February 2023 like-to-like (LTL) consumption across malls at 110 per cent of February 2020 levels. As per the company, while there were some concerns of a possible demand slowdown in December 2022, February 2023 LTL consumption numbers remain strong at 110 per cent of February 2020 levels (this would have been 2 per cent higher had two stores — Zara and Reliance Digital at Palladium, Mumbai, not been shut for renovation; for January 2023 LTL consumption growth was impacted by 3 per cent for the same reason).
With YTD-FY23 (April 2022 to February 2023), LTL consumption at 114 per cent of pre-Covid levels (April 2019 to February 2020), we model for FY23 rental income of ₹1,340 crore.
With Indore and Ahmedabad malls opening in December 2022/February 2023 respectively and Pune (Wakad) and Bengaluru (Hebbal) in H1FY24, we expect 17 per cent rental income CAGR over FY20-25.
We retain our Buy rating with an unchanged target price of ₹1,645/share which factors in the new Surat mall/Kolkata residential project and retain our 20 per cent premium to March 2023E NAV of ₹1,371/share considering opportunities from office capex and new malls.
Key risks are fresh Covid waves impacting consumption and fall in mall occupancies and rentals.