Phoenix Mills Ltd (BOM:503100) Q2 FY25 Earnings Call Highlights: Strong Retail Growth Amidst ...

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Mon, Oct 28, 2024, 5:00 AM 4 min read

Operating Revenue (Q2 FY25): INR918 crore, a 5% increase year on year.
EBITDA (Q2 FY25): INR518 crore, up 2% year on year.
Adjusted Operating Revenue (Excluding Residential, Q2 FY25): INR870 crore, a 22% growth.
Adjusted EBITDA (Excluding Residential, Q2 FY25): INR502 crore, up 19%.
Retailer Sales (Q2 FY25): INR3,279 crore, up 24% year on year.
Retail Rental (Q2 FY25): INR474 crore, a 22% increase.
Retail EBITDA (Q2 FY25): INR495 crore, up 22%.
Occupancy (September 2024): Leased occupancy at 97%, trading occupancy at 92%.
Commercial Office Income (Q2 FY25): INR54 crore, up 19%.
Commercial Office EBITDA (Q2 FY25): INR34 crore, up 31%.
Hotel Occupancy (Q2 FY25): Improved by 3 percentage points to 85%.
Average Room Rate (Q2 FY25): INR17,320, a 15% growth.
RevPAR (Q2 FY25): INR14,694, a 19% increase.
Liquidity Position (September 2024): INR1,974 crore.
Group Level Gross Debt (September 2024): INR4,379 crore.
Net Debt Position (September 2024): INR2,405 crore.
Net Debt-to-EBITDA Ratio: 1.1x.
Average Cost of Debt (September 2024): 8.67%.
Net Cash Flow from Operations (H1 FY25): INR1,000 crore.
Net Cash Flow from Operations (Q2 FY25): INR486 crore.

Warning! GuruFocus has detected 2 Warning Sign with BOM:503100.

Release Date: October 26, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Phoenix Mills Ltd (BOM:503100) reported a 22% growth in operating revenue for Q2 FY25, excluding the residential business, reaching INR870 crore.
Retail rental income grew by 22% to INR474 crore for the quarter, with retail EBITDA also increasing by 22% to INR495 crore.
The company's retail portfolio saw a 24% year-on-year increase in retailer sales for Q2 FY25, driven by the fast ramp-up of newly launched malls.
Phoenix Mills Ltd achieved a historic high EBITDA of INR1,027 crore for the first half of FY25, marking the first time EBITDA surpassed the INR1,000 crore mark.
The company's liquidity position was strong at INR1,974 crore as of September 2024, with a healthy net debt-to-EBITDA ratio of 1.1x.

Negative Points

The FEC and multiplex categories experienced a 15% decline in Q2 FY25, attributed to fewer blockbuster releases during the quarter.
Net profit after minority interest (PATMI) showed a decline, with a 14% year-over-year decrease in the latest quarter.
The company's commercial office occupancy in Mumbai and Pune stood at only 70% as of September 2024.
There was a noted impact on consumption in Chennai and Bangalore due to heavy rains, affecting performance by approximately INR20 crore.
The residential business saw a decline in gross sales, achieving only INR78 crore for the first half of FY25.

Q & A Highlights

Q: How has the start of the festive season been in terms of consumption levels? A: Shishir Shrivastava, Managing Director: This month has been mixed due to heavy rains in Chennai and Bangalore, impacting consumption by about INR 20 crore. However, Mumbai and Pune have been moderate. We expect high footfalls and consumption with the festive season weekends. Despite a general decline in retail sales, our like-to-like growth is around 7% to 9% for October, despite the rains.

Q: Can you explain the sharp 21% decline in the 'other' category last quarter? A: Shishir Shrivastava, Managing Director: The 'other' income typically includes parking income, marketing income, and event space rentals.

Q: What are the expected rentals for your recent acquisitions in Coimbatore, Mohali, and Thane? A: Shishir Shrivastava, Managing Director: We have underwritten conservative rentals, expecting a 14% yield on cost by the third year of operation. We typically track 15% higher than market averages.

Q: How is the progress on your office leasing side? A: Shishir Shrivastava, Managing Director: Office leasing is progressing well, with significant increases in revenue and EBITDA. We are awaiting the occupancy certificate in Bangalore for 800,000 square feet, with transactions for about 200,000 square feet ready to execute post-OC.

Q: Why is there a decline in PATMI despite strong EBITDA growth? A: Shishir Shrivastava, Managing Director: The decline is due to reduced liquidity affecting other income, increased taxes, and minority interest from JV projects. Our residential business margins are around 40% to 50%, not declining.

Q: How do you address the slowdown in urban consumption? A: Shishir Shrivastava, Managing Director: We focus on driving customer engagement through innovative events and experiences. Our malls consistently outperform national averages in store consumption, and we plan to continue leveraging events and brand partnerships to drive growth.

Q: What is the completion timeline for the Thane mall and the Kolkata residential project? A: Shishir Shrivastava, Managing Director: The Thane mall is expected to break ground in six months and be ready in about 4.5 years. The Kolkata residential project is slated for launch in Q1 FY26, with premarketing starting in the last quarter of this financial year.

Q: How do you plan to maintain double-digit consumption growth in mature malls? A: Shishir Shrivastava, Managing Director: Historically, we've maintained double-digit growth. We expect this trend to continue, driven by new brand additions, increased F&B offerings, and growing office occupancy, which adds a captive audience to our malls.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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