Phoenix Mills - Delivering Growth Through Expansion: Motilal Oswal

Motilal Oswal Report

The Phoenix Mills Ltd. has progressed well on ramping up occupancy in Indore and Ahmedabad. It has recently inaugurated Pune mall and is on track to deliver Bengaluru mall in Q3 FY24.

We believe that Phoenix Mills’ growth trajectory continues to remain intact, however a large part of earnings growth over the next two years is already priced in and we see limited upside potential in the near term. Thus we reiterate our 'Neutral' rating with a target price of Rs 1,845.

While near-term growth is priced in, the company’s upcoming mall portfolio provides strong growth visibility over the next three-four years. Hence, if we push up the valuation base to the end of FY27 (two-year return), taking into account a stabilized rental run rate for the upcoming malls and no pending capex, then our valuation for the retail segment increases to Rs 315 billion from Rs 260 billion in the base case.

Accordingly, our target price increases to Rs 2,150, indicating a two-year return potential of 19%.

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