Buy This Multibagger Small Cap Real Estate Stock For Target Price Of Rs 1,645: ICICI Securities

ICICI Securities, a leading brokerage firm, has recently published a report on Phoenix Mills Limited. In the report, the Brokerage suggests buy the stock of the company for a target price of Rs 1,645. Considering the estimated target price, the stocks have the potential to surge around 19% in the 12 months. Phoenix Mills is a small-cap Real Estate company having a market cap of Rs 24,814.26 crore.

Stock Outlook

On Friday, 18 August, the stocks of the company closed at Rs 1,389.80 apiece, gaining 0.79%. The current market price of the stock is trading Rs 56.40 above the 52 week low and Rs 30 below the 52-week high, respectively. The stock hit the 52-week low on 23 August 2021 at Rs 5793.40 apiece, whereas, the 52 week high the stock touched yesterday, 19 August, at Rs 1419.90.

Returns on Investments

The stock of the company last week surged by nearly 5.9%. Whereas, in the past 1 and 3 months, it gained 11.37% and 36.1%, respectively. Over the past 1 year, the stocks of the company gave a positive return of 67.23%. The stocks gave multibagger returns of 118.95% and 157.73%, respectively.

Consumption recovery firmly on track

In Q3FY22, LTL consumption across Phoenix Mills' malls stood at Rs18.4bn or 89% of Q3FY20 levels. In Jan'22, LTL consumption stood at 70% of Jan'20 levels in spite of Omicron disruption in mall operations for the month, and in Feb'22, consumption levels were back to 94% of pre-Covid levels. In Mar'22, consumption across malls stood at Rs5.6bn or 105% of Mar'19 levels on LTL basis (Mar'20 saw mall shutdowns hence not comparable) while Q4FY22 consumption of Rs14.8bn stood at 91% of Q4FY19 levels on LTL basis. This momentum has carried forward into Q1FY23 (Apr-Jun'22) with LTL consumption across malls at Rs19.8bn or 111% of Apr-Jun'19 (Q1FY20) levels) basis and has continued in Jul'22 where LTL consumption stood at 120% of Jul'19 levels aided by retailers' End of Season sale. Phoenix Palladium, Mumbai has seen retail leasable area increase by 0.15msf in Q1FY23 to 0.92msf and will increase by another 0.25msf in FY24E owing to a new retail block opposite PVR. We have raised our FY23/24E retail rental estimates by 8% each to Rs13.7bn/17.9bn.

Estimated rental income CAGR of 17% over FY20-25E

Phoenix Mills will have ~13msf operational mall space by FY26E (6.9msf currently operational). We expect Phoenix Mills to achieve a 17% rental income CAGR (ex-new Kolkata asset) over FY20-25E, resulting in Rs22.4bn of rental income in FY25E vs. ~Rs10.3bn in FY20. Of the Rs22.4bn of gross rental income in FY25E, PHNX's share is ~77% or Rs17.3bn.

Strong consumption flows through to rentals, buy for a target price of Rs 1,645/share

The Phoenix Mills saw Q1FY23 (Apr-Jun'22) like-to-like (LTL) consumption across malls at Rs19.8bn or 111% of Apr-Jun'19 (Q1FY20) levels which translated into Q1FY23 retail LTL EBITDA of Rs2.9bn or 115% of Q1FY20 levels. Jul'22 LTL consumption was at 120% of Jul'19 levels on the back of retailers' End of Season sale. 

ICICI Securities said, "Owing to the better-than-expected consumption/rentals, we raise our FY23/24E retail EBITDA estimates by 8% each and now model for FY23E rental income of Rs13.7bn (Rs12.2bn on LTL basis vs. Rs10.3bn in FY20). "With Indore and Ahmedabad malls to open in FY23E and Pune (Wakad) and Bengaluru (Hebbal) in FY24E, we expect 17% rental income CAGR over FY20-25E. We reiterate our BUY rating with a revised target price of Rsc1,645/share (earlier Rs1,392) as we increase our Mar'23E NAV to Rs1,371/share (earlier Rs1,160) incorporating higher rentals in operational assets for FY23-24E, increase in Palladium, Mumbai leasable area and strong performance of St. Regis, Mumbai hotel while retaining our premium to NAV of 20% considering growth opportunities from new office capex and new malls (including Surat)."

The brokerage added, "Key risks to our call are a fresh Covid wave impacting mall consumption and fall in mall occupancies and rentals."

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.