As footfalls increase, this mall stock finds itself in a sweet spot

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26 Aug, 2025 12:21

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Mall developers Phoenix Mills Ltd’s business, which took a big hit due to the coronavirus-induced restrictions, is making a smart recovery, with the consumption rising in the September quarter and improving further in October 2021.

Restrictions were imposed in April when the second wave of coronavirus tore through the country. The curbs on malls were eased only later in August but the reopening, in a calibrated manner, has meant high footfalls and higher consumption.

Phoenix Mills Ltd’s September quarter results (Q2FY22) mirror the change. Consumption across its malls rose sharply to Rs 1,012 crore from Rs260 crore in the previous quarter.

“Consumption in Q2FY22 (including Phoenix Palassio) was 74 percent of Q2FY20,” the company said.

The Q2FY20 was a pre-pandemic quarter. The consumption recovery after the second lockdown was swifter when compared to the first lockdown in 2020.

The momentum gathered pace, with consumption in October 2021 at 90 percent of October 2019, primarily driven by Phoenix Palladium where recovery stands at 86 percent of October 2019.

“Phoenix Mills over the past two quarters has shown a strong correlation of consumption across its assets with easing of lockdown restrictions, reaffirming our view of recovery in consumption levels once normalcy returns,” said analysts from Kotak Institutional Equities in a report on November 3.

The brokerage firm revised the EBITDA estimates for FY2022E to Rs 740 crore from Rs 730 crore to factor in earnings restoration of escalated rentals from 2HFY22 across most of the assets, while leaving FY2023E earnings largely unchanged.

EBITDA is earnings before interest, tax, depreciation and amortisation, a key measure of companies’ profitability.

“While FY22 will be a year of rental stabilisation, FY23-24 will see the addition of four new malls which will help drive growth in the near term,” JM Financial Institutional Securities Ltd’s analysts wrote in a report on November 3.

Within other segments, Phoenix’s commercial revenues in Q2FY22 rose 16 percent quarter-on-quarter. Residential and hospitality revenues increased 63 percent and 129 percent, respectively from the June quarter. Overall, EBITDA in Q2FY22 stood at Rs 186 crore, up from Rs 76 crore in the June quarter.

Phoenix's stock has rallied 32 percent from Rs 774.55 a share on December 31, 2020 to Rs 1,024.3 on November 4, indicating investors are factoring a good portion of the recovery in the price. On the flip side, this can limit sharp upsides in the near future.

“We believe on the back of deals with GIC Singapore and CPP Investments, Phoenix remains extremely well placed with group-level liquidity of Rs 1,320 crore (Rs 2,979 crore net debt; Phoenix share Rs 2,096 crore) and is poised to benefit from the recovery in consumption across cities and development of new malls,” JM Financial’s analysts said.

While this augurs well, the key risk for Phoenix remains a possible third wave that can delay recovery due to fresh restrictions coming into play.