Mumbai : When the Omicron version of Covid-19 hit in January, mall developer The Phoenix Mills Ltd’s operations were hit. Things have since started to show up, with restrictions easing in major cities.
As per the company’s latest presentation, retail consumption in March stood at 142% and 116% in 2021 and 2019, respectively, over the same month. Since the nationwide lockdown hit malls in March 2020, the 2019 figures have been used for comparison. During the fourth quarter (Q4FY22), retail consumption was 1,657 crores, representing 115% and 102% of the measurements in Q4FY21 and Q4FY19 respectively. This shows that consumption has crossed the pre-Covid levels. Analysts at ICICI Securities said in a report on April 6 that on a similar-to-equivalent basis, Q4FY22 consumption stood at 91% over Q4FY19. Here, analysts have excluded the numbers for Phoenix Palacio, Lucknow, which started operations in FY11.
see full image
However, March was better with similar consumption at 105% of 2019 levels, said ICICI Securities. There has been an increase in the number of people in March as the Food and Beverage (F&B) outlets became fully operational. As a result, retail collections Has crossed the previous peak of 480 cr in Q4FY22 440 cr in Q3FY22.
With the opening of various malls by Phoenix Mills, lease rentals are poised to further recover. Its Indore and Ahmedabad malls are scheduled to open in FY23. Malls in Wakad, Pune and Hebbal, Bengaluru will open in FY24. Analysts at Antique Stock Broking Ltd say pre-leasing activity at these malls continues to remain strong, coupled with a strong rental trend. Analysts at ICICI Securities Ltd expect the company’s rental income to see a 14% compound annual growth rate in FY20-25.
Also, with the return of leisure and corporate travel, its hospitality segment has also witnessed an increase in occupancy levels in Q4FY22. In March 2022, the occupancy of St Regis, Mumbai reached 90% versus 70-80% in Q3FY22.
On the other hand, the potential fresh Covid waves and the accompanying mobility restrictions are a major risk. In addition, high inflation can wreak havoc on demand and purchasing power. This could affect the number of people at malls and F&B outlets, which could have an impact on rental recovery. Shares of Phoenix Mills climbed 44% in the past one year, just ahead of the Nifty Realty index’s 42% return. “Timely mall starts and trends in mall lease rentals are key for the stock to see a meaningful bounce from here,” said one analyst who spoke on condition of anonymity.
download
The app will get 14 days of unlimited access to Mint Premium absolutely free!