MOSL: PHOENIX MILLS-(Buy)- Annual Report Update-Organic and inorganic opportunities driving aggressive growth
Phoenix Mills | Annual Report Update: Organic and inorganic opportunities driving aggressive growth
(PHNX IN, Mkt Cap USD1.2b, CMP INR547, TP INR720, 32% Upside, Buy)
We analyzed Phoenix Mills’ FY18 Annual Report and key takeaways are:
- Performance highlights: On a standalone basis (only High Street Phoenix (HSP) and Palladium, Mumbai), income from operations increased 6% YoY to INR3,972m in FY18 from INR3,759m in FY17. On a consolidated basis, income from operations decreased by 11% to INR16,198m in FY18 from INR18,246m in FY17. The decrease in revenues was on account of the Classic Mall Development Company (PMC Chennai) being classified as an associate against a subsidiary previously. Total retail income from malls stood at INR10,595m, down 11% YoY. Hospitality and other revenue came in at INR3,429m, up 12% YoY. Revenue from residential projects stood at INR1,562m, while commercial revenue was INR611m. Consolidated EBITDA decreased by 8% to INR7,774m in FY18 from INR8,469m in FY17; however, consolidated margins have increased to 48% in FY18 from 46% in FY17.
- Strong consumption growth across malls: Consumption across malls was strong at INR63.2b, growing 9% from INR58b in FY18. Also, strong renewals across properties contributed to a superior operational performance. All the four Phoenix MarketCity hubs at Chennai, Pune, Mumbai and Bengaluru have completed their first five-year cycle and continue to be amongst the best performing retail destinations in their respective cities.
The Phoenix Mills Limited is an India-based company engaged in the construction of buildings carried out on own-account basis or on a fee or contract basis. The Company is engaged in the development and operation of malls and other real estate properties. It operates through twos segments: Property & Related Services, and Hospitality Services. It specializes in the ownership, management and development of retail-led mixed use properties that include shopping, entertainment, commercial, residential and hospitality assets, aggregating approximately 17.5 million square feet over 100 acres. Its core business includes Retail, Hospitality, Commercial and Residential. Under the Retail segment, it operates seven malls in six cities. Under Commercial and Hospitality segments, it operates five commercial centers in two cities and two completed hotel projects. The upscale mall houses various international brands, such as Gucci, Jimmy Choo, Bottega Veneta and Ermenegildo Zegna, among others.
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