ICICI Direct initiates coverage with buy on Phoenix Mills, sees 24% upside

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26 Aug, 2025 12:21

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ICICI Direct has initiated coverage on Phoenix Mills with a buy rating and price target at Rs 775, implying a potential upside of 25 percent in the next 18-24 months.

The research house likes the company given its quality of retail asset portfolio, almost doubling its asset portfolio, which would drive the next leg of growth.

"PML's current valuation reflects only operational retail & commercial asset valuation and does not assign any value to its expansion portfolio (around 24 percent of valuation)," it said.

Going ahead, the company plans to almost double its retail portfolio and triple its commercial asset portfolio.

Consequently, the research house expects its rental income to almost double to Rs 1,702 crore in FY18-23E. "We also highlight that the company is well funded for its current expansion plans through CPPIB alliance and strong internal accruals."

According to ICICI Direct, the company would require equity commitment of around Rs 1,710 crore during FY19E-23E to fund its current expansion plans.

"The recent CPPIB alliance bringing Rs 1,662 crore money in the platform (Rs 938 crore are infused in FY19E) for expansion of its retail portfolio (Hebbal: 1 msf, Wakad:1 msf, Indore:1.1msf) and operational cash flow worth Rs 700-1,000 crore per annum are more sufficient to fund its expansion plans," it explained.

Phoenix Mills is a market leader and owner of prime malls in India. It started the real estate business with its iconic High Street Phoenix mall.

Sailing on its retail-led mixed-use development model, the company has an operational asset portfolio of eight operational retail assets aggregating 5.9 million square feet (msf) and four operational commercial assets aggregating 1.16 million square feet.

Phoenix has two under construction assets at Pune, Chennai with GLA of 1.12 msf and plans to develop commercial asset at PMC Hebbal with GLA of 0.65 msf.

"These expansions would augment PML's commercial portfolio to around 3 msf in next four to five years. Once operational, we expect the commercial portfolio rentals to grow at 23.5 percent CAGR to Rs 223.4 crore in FY18-24E," ICICI Direct said.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.