ICICI Securities
Phoenix Mills (Buy)
Target:₹1,231
CMP: ₹1029.3
As per company, The Phoenix Mills (PHNX) has clocked mall consumption of ₹660 crore in Nov’21 which is 116 per cent of Nov’19 levels and ₹670 crore in Oct’21 which is 91 per cent of Oct’19 levels.
While the threat of a fresh round of Covid induced mall closures remains a risk, we expect mall rentals to revert to pre-Covid levels by Q4-FY22 as consumption continues to improve. With the company having received an additional ₹780 crore of liquidity from CPPIB in Nov’21 as the first tranche for The Rise office/retail project in Mumbai, Phoenix has cumulatively raised/tied up ₹4,350 crore of funding between Q2-FY21 and Q3-FY22.
With just ₹1,380 crore of net debt as of Nov’21, the company’s strong balance sheet acts as a cushion against any fresh Covid induced rental losses.
We reiterate our Buy rating with an unchanged Mar-22 SoTP based target price of ₹1,231/share which includes Phoenix Rise office and retail project of 1.2msf and retain our 10 per cent premium to NAV considering growth opportunities from growth capital raised from GIC PE and CPPIB platform deals.
Key risks to our call are a fresh Covid wave impacting mall consumption and fall in mall occupancies and rentals.