Phoenix Mills Ltd : steady performance

Phoenix Mills Ltd (PML): Another quarter of steady performance

Phoenix Mills Ltd (PML) delivered steady performance in Q2FY13 with High Street Phoenix (HSP) witnessing continued growth in revenue (up 6% QoQ). PML received strong response to its launch of “One Bangalore West” – sold out Phase-1 of 0.7 msf (275 units) for Rs 5.3 bn (average realization of ~Rs 7,000/ psf).

Consumption at market cities gained momentum driven by improvement in occupancy levels – Kurla (70% vs. 59% in Q1), Pune (76% vs. 70% in Q1) and Bangalore (66% vs. 62% in Q1). We expect consumption to improve further as these malls reach their peak occupancies.

Key highlights

PML reported standalone revenue of Rs 665 mn (up 6% QoQ), EBIDTA of Rs 438 mn (up 11% QoQ), and PAT of Rs 330 mn (up 8% QoQ) in Q2 – in line with expectations.

HSP continued to witness strong growth in consumption (up 9% QoQ) and avg rentals (Rs 185 vs. Rs 177 in Q1).

Market City Pune reported revenue of ~Rs 284 mn (~Rs 254 mn in Q1) and average rentals of Rs 63/ psf p.m (Rs 60/ psf p.m. in Q1).

Hotel Shangri-La: PML has already incurred ~100% of capex. It is yet to receive Environmental Clearance (EC) from State Expert Appraisal Committee (SEAC). Management expects to receive EC for the project in Q3FY13.

Maintain BUY with TP of Rs 242

Cash flow visibility remains strong driven by (1) steady growth at HSP, (2) pick-up in momentum at Market Cities, and (3) sales from projects (Orion Park and Graceworks in Kurla, East Court in Pune, housing projects in Chennai and Bangalore). Receipt of EC (expected in H2FY13) for Shangri-La to be a key trigger for the stock. Maintain BUY with TP of Rs 242 .

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