Retail consumption at malls run by The Phoenix Mills Ltd has remained steady in February, although not particularly exciting. Month-on-month, total consumption fell by 21% due to seasonality factors such as fewer number of operational days in February, lack of festivals and the end of the holiday season.
On a like-to-like basis, consumption for last month was 110% of February 2020 (pre-covid levels). This excludes contribution from Phoenix Palassio and Phoenix Citadel, which opened in July 2020 and December 2022 respectively. Year-to-date (April to February), like-to-like consumption was 114% of FY20 levels. Given this, for FY23, ICICI Securities has pencilled in a rental income of ₹1,340 crore (or ₹1,200 crore on a like-to-like basis) versus ₹1,030 crore in FY20.
As and when Phoenix adds malls to its portfolio, that should aid consumption, going ahead. Last month, the company’s Palladium mall in Ahmedabad commenced operations. Further, two malls in Pune and Bengaluru are expected to become operational in the June quarter (Q1FY24). By FY27, Phoenix’s retail space is expected to be around 14 mn sq. feet (msf), up from 6.9msf in FY22. ICICI Securities expects Phoenix to achieve a 17% compound annual growth rate (ex-new Kolkata asset) in rental income over FY20-25E, resulting in ₹2,240 crore of rental income in FY25E. Out of this, Phoenix’s share is about 77% or ₹1,730 crore, said ICICI Securities.
The retail business is Phoenix’s mainstay, contributing 68% of revenues for the nine months ended December. The company also derives revenues from residential, commercial, hospitality and others. Phoenix’s hospitality segment has been on a strong footing this year. Higher room rates are a factor helping the segment’s performance. Phoenix’s St. Regis, Mumbai, saw a sharp 23% month-on-month jump in revenue per available room in February to ₹18,180. Occupancy rate rose to 89% from 83% in January. At Courtyard by Marriott, Agra, too, room occupancy and revenue have improved sequentially. Nuvama Research expects revival of consumption at malls and hotel occupancy, and liquidation of ready inventory in the housing segment, to culminate in robust cash flows for Phoenix Mills.