Buy Phoenix Mills India Ltd for the Target Rs 2,300 by Emkay Global Financial Services Ltd
We upgrade Phoenix Mills (PHNX) to BUY from Reduce and raise TP by ~12% to Rs2,300 (SOTP method, based on 1HFY29E EV/EBITDA) from Rs 2,050, driven by sustained momentum in retail consumption. Consumption growth remained strong at 28% yoy in 1HFY27 (20% like-for-like) versus 21% in FY26 (12% like-for-like). Encouraging Oct-26 trends support our expectation of highteens like-for-like growth in 2HFY27. In addition, asset revamps, improving occupancy, and lease renewals should drive mid-teens rental growth in the operational portfolio over the medium term. We raise FY27-29E EBITDA by 4%, roll forward our valuation to 1HFY29E EBITDA, and increase our retail multiple from 20x to 22x, factoring in sustained consumption growth, a healthy land pipeline, and strong visibility on asset additions beyond FY30.
2QFY27 snapshot
Retail: In 2QFY27, consumption stood at Rs46.8bn (+25% yoy). Rental revenue stood at Rs6.0bn (+15% yoy), while EBITDA stood at Rs6.4bn (+18% yoy). Retail rental to consumption stood at 12.9% (12.6% in 1QFY27 and 14.0% in 2QFY26). Commercial: Total income stood at Rs0.89bn (+68% yoy) and EBITDA at Rs0.57bn grew 63% yoy.
Hospitality: Total income grew 12% yoy to Rs1.4bn, led by ARR growth of 20% in St Regis and 13% growth in Courtyard by Marriott. EBITDA stood at Rs0.57bn (+12% yoy).
Financial: Revenue stood at Rs11.5bn (+3% yoy). EBITDA grew 7% yoy to Rs7.1bn, with EBITDA margin at 61.6%. PAT at Rs3.2bn grew 7% yoy. Net debt stood at Rs34.8bn. Net debt-to-EBITDA stood at 1.2x. Core revenue (retail, commercial, and hospitality) stood at Rs10.5bn (+16% yoy) and core EBITDA at Rs6.7bn (+21% yoy)
Strong asset addition visibility extending beyond FY29
Three under-construction assets are expected to commence rentals by FY29, with another three projects expected to be operational by FY31, providing growth visibility beyond FY30. Strong annual cash flows of ~Rs25bn support further land acquisitions, with one deal expected to close in 2H (advance payment already made) and a few more at advanced stages of negotiation.
All-around healthy consumption growth
Consumption growth for PHNX was seen across categories: Fashion – +22% yoy; Jewelry – +28% yoy; Electronics – +39% yoy; F&B – +21% yoy; Others – +34% yoy. All assets saw strong high-teens growth, with Mall of Asia Bengaluru witnessing 68% consumption growth. Tenant remix and asset revamp strategies have led to healthy growth. PMC Bengaluru and Pune (recently revamped) witnessed 19% and 21% consumption growth, respectively. Momentum in consumption growth is expected to sustain, per management, with Oct-26 witnessing high-teens growth adjusting for festive days.
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