Buy Nexus Select Trust; target of Rs 157: ICICI Securities

ICICI Securities research report on Nexus Select Trust

The REIT manager of Nexus Select Trust announced the closure of the acquisition of Vega City Mall, a Grade A mall located in south Bengaluru for a total EV of INR 9.1bn (initial purchase cost of INR 8.7bn – funded 100% by debt at 7.7% and balance towards planned capex). The REIT manager estimates that the asset may add stabilised NOI of INR 780mn in FY26 and an incremental NDCF accretion of INR 200mn post servicing debt. We assume a base rental of INR 117/sq.ft. per month ex-CAM and raise our FY26–27E revenue and NOI estimates by 4% and DPU estimates by 1%, factoring in incremental debt taken at 7.7% and acquisition synergies.

Outlook

Upgrade to BUY, from Add; Mar’25E DCF-based TP of INR 157 unchanged, incorporating Vega City asset into our estimates. We expect Nexus REIT to deliver distribution yield of 6.4%/6.8% in FY25E/FY26E.