Phoenix Mills extends gains to jump 5%, analysts bullish after robust Q2 growth

The Phoenix Mills stock jumped over 5 percent on November 13, extending gains for yet another session after the developer reported a good set of numbers on robust consumption growth across malls.

Analysts believe that growth in the second half of FY24 should be even stronger, helped by a seasonally strong period and the opening of four new malls recently.

For the September quarter, net profit rose 37 percent on-year to Rs 303.82 crore and the company’s total income jumped 32 percent to Rs 906.64 crore.

Phoenix Mills shares closed at Rs 2,113.95 on the National Stock Exchange, 5.16 percent higher from the previous close. The stock has rallied 48 percent this year, outperforming benchmark Nifty which has gained 7 percent during the period.

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Outlook

Phoenix Mills is evaluating the best use case for the land, which would be finalised in two-three months, said JM Financial Services in a report.

“We believe Phoenix Mills remains well-placed with low debt to equity, partnerships with global funds, strong earnings trajectory on the back of sustained consumption growth and development of new assets,” its analysts said.

Nuvama Institutional Equities, too, is bullish on Phoenix Mills. Its “leadership position in the retail realty space, ongoing industry consolidation, and its unique understanding of the Indian consumer’s psyche coupled with the structural story of urban consumption growth underpin our bullish stance on the company,” the brokerage said.

Entry in new cities and operationalisation of under-construction/planned assets are some of the stock triggers that Nuvama analysts expect to play out over the next few years.

Should you buy?

Nuvama has a “buy” call on the stock with a target price of Rs 2,407 (at a 30 percent premium to Q2FY26E based net asset value (NAV) of Rs 1,852). Sharp revival in consumption post the pandemic, Resilience of the business model, sound cost structure and comfort about cash flows are the reasons cited by the brokerage for the call.

A limited number of players in the retail realty space, especially those willing to undertake development risk, Phoenix Mills’ innovation in the retail space, a robust balance sheet and consumption being a natural corollary to economic growth are among the other factors behind the bullish stance.

The management expects a good pick-up in the newly launched malls in Pune and Bengaluru. JM Financial has also maintained a “buy” rating on the stock with a revised SOTP-based target price of Rs 2,270 (earlier Rs 2,010) based on 20 percent premium to the retail segment Sep’24E NAV.

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Phoenix Mills projects

The company has got all development permissions for Phoenix Grand Victoria in Kolkata and work is under progress, it said. The company will begin work on a mall in Surat this quarter. The retail expansion of Phoenix Palladium, Mumbai, is expected to be completed by FY24. Work is at various stages on projects in Bengaluru and   Pune.

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