ICICI Securities Bets On This Multibagger Small Cap Real Estate Stock, Buy For Rs 1,645 Target Price
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Stock Outlook
The Current Market Price (CMP) of the stock is Rs 1,394.35/share. The 52-week low level of the stock is Rs 827.25/share and the 52 week high level is Rs 1,448.95/share, respectively. Stock is trading near 52 week high.
Returns on Investment
The stock of the company in the past 1 week, gave roughly 0.42%. It has given 6.66% in the past 1 month and 23.34% in the past 3 months, respectively. Whereas, over the past 1 year, the stock gave 59.94% positive return. However, over the past 3 years, it gave a multibagger return of 104.05%. It has given nearly 184.18% multibagger return over the past 5 years.
Consumption recovery firmly on track
In Q3FY22, LTL consumption across Phoenix Mills’ malls stood at Rs18.4bn or 89% of Q3FY20 levels. In Jan’22, LTL consumption stood at 70% of Jan’20 levels in spite of Omicron disruption in mall operations for the month, and in Feb’22, consumption levels were back to 94% of pre-Covid levels. In Mar’22, consumption across malls stood at Rs5.6bn or 105% of Mar’19 levels on LTL basis (Mar’20 saw mall shutdowns hence not comparable) while Q4FY22 consumption of Rs14.8bn stood at 91% of Q4FY19 levels on LTL basis. This momentum carried forward into Q1FY23 (Apr-Jun’22) with LTL consumption across malls at Rs19.8bn or 111% of Apr-Jun’19 (Q1FY20) levels) and continued in Jul’22 where LTL consumption stood at 120% of Jul’19 levels aided by retailers’ End of Season sale. In Aug’22, overall consumption across malls stood at Rs7.4bn while LTL consumption stood at Rs6.7bn or 114% of Aug’19 levels.
Consumption growth has started flowing into rentals
With a strong bounce back in consumption across categories in Q1FY23, retail rental collections (including CAM) increased by 10% QoQ to Rs5.3bn and Phoenix Palladium saw addition of 0.15msf of new Gross Leasable Area in Q1FY23.
Estimated rental income CAGR of 17% over FY20-25E
Phoenix Mills will have ~13msf operational mall space by FY26E (6.9msf currently operational). We expect Phoenix Mills to achieve a 17% rental income CAGR (ex-new Kolkata asset) over FY20-25E, resulting in Rs22.4bn of rental income in FY25E vs. ~Rs10.3bn in FY20. Of the Rs22.4bn of gross rental income in FY25E, Phoenix Mills’ share is ~77% or Rs17.3bn.
Outlook
The Phoenix Mills saw Aug’22 like-to-like (LTL) consumption across malls at Rs6.7bn or 114% of Aug’19 levels and mirrors the Jul’22 LTL consumption growth which was at 120% of Jul’19 levels on the back of retailers’ End of Season sale. In Q1FY23 (Apr-Jun’22), LTL consumption across malls stood at Rs19.8bn or 111% of Apr-Jun’19 (Q1FY20) levels which translated into Q1FY23 retail LTL EBITDA of Rs2.9bn or 115% of Q1FY20 levels. Owing to continued consumption strength, we model for FY23E rental income of Rs13.7bn (Rs12.2bn on LTL basis vs. Rs10.3bn in FY20). With Indore and Ahmedabad malls to open in FY23E and Pune (Wakad) and Bengaluru (Hebbal) in FY24E, we expect 17% rental income CAGR over FY20-25E.
