Buy Phoenix Mills; target of Rs 982: HDFC Securities

HDFC Securities' research report on Phoenix Mills

Phoenix Mills (PHNX) reported strong recovery as revenue came in 7% ahead of our estimate and surprised positively on EBITDA margin for the quarter (47% vs 40% est.). Consequently, PAT came in at Rs 654mn, against our estimated loss of Rs 60mn (aided buy Rs 249mn of MAT credit reinstatement). Consumption recovered to 67% of 3QFY20 level during 3QFY21 on the back of festive season and further improved to 83% in Jan-21. Revenue from commercial was at 94% of 3QFY20. Residential segment also posted strong recovery with sales of Rs 556mn. Hospitality busines has started breaking even from 3QFY21.

Outlook

Despite the near term challenges, we expect PHNX FY22E rental to be at par with FY20E as discount unwinds to pre-COVID contract rentals including FY21 escalations. Maintain BUY with unchanged TP of Rs 982/sh.