Phoenix Mills Results Report - Second wave haults recovery - HDFC Securities

Mr. Parikshit D Kandpal, CFA, HDFC Securities and Chintan Parikh, Institutional Research Analyst, HDFC Securities

Phoenix Mills (PHNX) reported strong recovery as consumption reached 90% of 4QFY20 on a like to like basis. Retail rental income during the year was 55% of FY20, better than guidance of 45-50%. Hospitality business also saw strong recovery as it benefitted from social events and staycation trend. Residential segment continued on the recovery path with sales of INR 630mn. However, lockdown following second wave haulted the recovery. Despite the near-term challenges, PHNX is on track to achieve its target of 12msf retail and 6msf commercial GLA by FY24 and will look to add 1msf every year. We remain positive on PHNX, given the strong liquidity and reiterate BUY with reduced target price of INR 973/sh. We have tweaked our FY22/FY23 EPS estimates by -44/+1% to account for the impact of the second wave.

Financial highlights: Revenue: INR 3.8bn (-3.4/+14.2% YoY/QoQ, 5% miss). EBITDA: INR 1.7bn (-15/+9% YoY/QoQ, 13% miss). EBITDA margin: 44.9% (- 623/-206 bps YoY/QoQ, vs 49.1% est.). Other income of INR 496mn includes INR 251mn one-off gain on sale of asset. Adjusting for that, other income comes to INR 245mn (2.4x 4QFY21, +62% QoQ). RPAT: INR 655mn (+40% YoY, flattish QoQ). APAT: INR 466mn (flattish YoY, -29% QoQ, 27% miss).

Relief to retailers to be as provided in the first lockdown: While consumption/footfalls reached 100/83% of 4QFY20, shutting down of malls after the second wave haulted recovery. On a like to like basis, consumption recovery was at 90%. Retail rental income reached 55% of FY20 for the year, higher than 45-50% guidance. Given the uncertainty, PHNX has not yet negotiated with the retailers but expects the terms to be similar to those extended during the first lockdown.

De-risking away from construction finance: Consolidated net debt reduced to INR 38.7bn from INR 42.7bn at Mar 20-end. To reduce the reliance on construction finance, PHNX and CPPIB would further infuse INR 8bn (INR 4bn each) in ISML, which holds under-construction Pune, Bengaluru and Indore assets. In a separate transaction, CPPIB would invest INR 3.8bn in Mindstone (Kolkata mall) for 49% stake in the subsidiary. PHNX is also looking to develop Project Rise in Worli, Mumbai, at a cost of INR ~11bn.

Shares of The Phoenix Mills Ltd was last trading in BSE at Rs.787.35 as compared to the previous close of Rs. 790.55. The total number of shares traded during the day was 2975 in over 419 trades.

The stock hit an intraday high of Rs. 814.85 and intraday low of 785.5. The net turnover during the day was Rs. 2353441.

Source : Equity Bulls

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