Result Update: The Phoenix Mills Ltd - ACCUMULATE - TP Rs.676 - Kotak

Phoenix mills ltd's net profit was ahead of our estimates led by improvement in rental revenues and debt refinancing at lower rates. Growth going ahead is likely to be led by improvement in rentals as well as uptick in residential segment revenue booking.

Key highlights

- Retail segment revenues are likely to witness healthy improvement going forward with rental renegotiations and consumption improvement. Residential segment revenues are likely to improve with improvement in market activity in its key regions.

- Average interest rate of debt has come down with refinancing as well as rating improvements.

- In April 2018, company announced that it acquired 13 acres of land parcel in Hebbel, Bangalore for Rs 6.93 bn with a development potential of 1.8 mn sq ft (excluding TDR). With Pune and Bangalore land acquisitions, company has committed majority of equity infused by CPPIB.

Valuation and outlook

At current price of Rs 619, stock is trading at 34.5x and 29.9x P/E and 14.7x and 13.5x EV/EBITDA on FY19/20 consolidated estimates respectively. We continue to remain positive on the company and tweak our estimates and arrive at a revised price target of Rs 676 (Rs 672 earlier) on FY20 estimates. Owing to limited upside, we downgrade the stock to ACCUMULATE from BUY earlier.

Shares of The Phoenix Mills Ltd was last trading in BSE at Rs.631.5 as compared to the previous close of Rs. 608. The total number of shares traded during the day was 9719 in over 591 trades.

The stock hit an intraday high of Rs. 633 and intraday low of 596.85. The net turnover during the day was Rs. 5935249.

Source : Equity Bulls

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