Result Update: The Phoenix Mills Ltd - BUY - TP Rs.672 - Kotak

Phoenix mills reported results were ahead of our estimates led by improved rentals and consumption across its retail assets. Residential revenues continue to decline due to lower revenue booking in that segment. Revenues for Q3FY18 are not exactly comparable with Q3FY17 since Chennai market city ceases to be a subsidiary and residential segment revenue booking was too sharp during Q3FY17. Margins stood strong due to rental improvements leading to better than expected net profit performance.

Rentals have witnessed an improvement across its malls and further rental renegotiation is expected in the coming years at higher rates. Company has also completed the buyout of remaining stakes in other market cities (except Chennai market city) and further free cash flows are likely to be utilized for debt reduction and further expansion in retail and commercial assets. CPPIB funds are being deployed for land purchases and company expects to add nearly 3-4 malls in next 4-5 years. Matured asset portfolio is likely to increase cash flows further which enables the company to add further malls in its portfolio. Going ahead, the focus of the company will be on new investments post funding by CPPIB along with debt reduction.

We tweak our estimates to factor in 9MFY18 performance and also introduce FY20 estimates. We roll forward our valuations on FY20 estimates and arrive at a revised price target of Rs 672 (Rs 594 earlier on FY19 estimates). We maintain BUY on Phoenix mills.

Shares of The Phoenix Mills Ltd was last trading in BSE at Rs.605 as compared to the previous close of Rs. 596.4. The total number of shares traded during the day was 1556 in over 207 trades.

The stock hit an intraday high of Rs. 613.8 and intraday low of 601. The net turnover during the day was Rs. 942987.

Source : Equity Bulls

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