Buy Phoenix Mills - Kotak

Result highlights: Revenues of the company were better than our estimates led by improvement in rentals. Strong operating margins and higher other income boosted net profit growth. Pune, Kurla and Bangalore market cities are slowly witnessing increased trading densities while Chennai market city is expected to commence operations by Q3FY13. We maintain BUY on the stock.

- Phoenix mills had reported a growth of 23.4% in revenues for Q2FY13 primarily led by improvement in rentals in high street phoenix.

- Operating margins stood strong at 66% for Q2FY13 but adjusted with reclassification of electricity charges in revenues and expenses, margins stood at 76.7%.

- Net profit growth was boosted by strong operating margins and higher other income.

- We tweak our estimates to factor in improved rentals as well as reclassification of expenses related to electricity charges and expect revenues to grow at a CAGR of 33% between FY12-FY14. We also reduce valuations from Shangri-La project on account of continued delays seen in getting required clearances. We arrive at a revised price target of Rs230 on FY14 estimates (Rs 237 earlier) and continue to maintain BUY on the stock.

Source : Equity Bulls

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