PHOENIXLTD - The Phoenix Mills Ltd. Share Price

Management's outlook for FY26 is positive, emphasizing strong momentum across their core businesses of retail, office, and hotel sectors. They anticipate delivering double-digit growth, underpinned by sustained consumer demand and strategic enhancements to their portfolio. Key highlights from the forward-looking statements include:

1. Retail Performance: Retail sales for April 2025 are projected to exceed Rs. 1,130 crores, representing a 14% year-on-year growth. Management is focusing on strategic leasing, brand elevation, and enhancing the tenant mix, especially in premium categories such as jewelry and fine dining.

2. Commercial Office Developments: The company expects significant leasing activity in FY26 across Pune, Bangalore, and Chennai, targeting upwards of 1.2 million sq. ft. in discussions. Millennium Towers in Pune and Phoenix Asia Towers in Bangalore are receiving occupation certificates, with strong pre-leasing momentum observed.

3. Capital Expenditure Plans: Management plans to maintain annual capital expenditure around Rs. 1,200 crores over the next five years, focusing on proactive land acquisitions and construction to support long-term portfolio growth.

4. New Developments: The company secured additional development rights for 136,000 sq. meters in Lower Parel for approximately Rs. 586 crores, indicating ongoing expansion efforts. They aim to add around 7 million sq. ft. of retail space by FY30, increasing their operational portfolio from 11.5 million to over 18 million sq. ft.

5. Residential Segment: Future residential launches are planned for FY26, including projects in Bangalore and Kolkata, with current sales and realization reflecting strong demand for premium products.

Overall, the management's outlook is optimistic, focusing on growth through strategic planning and investments in high-quality assets while maintaining financial flexibility.

Here are the major questions and their detailed answers from the Q&A section of the earnings transcript:

1. Question by Puneet (HSBC): "How long should we think the impact will last for those mall interventions? What kind of CAPEX will that entail?"

Answer: "Hi Puneet, for the new spaces, you should see them reopening in 6 to 9 months. We are adding about 450,000 sq. ft. in various malls, with 250,000 sq. ft. in Phoenix Palladium alone. This includes enhanced areas that will support significant consumption growth. A strong year is anticipated for FY27 post these enhancements, ensuring we'll provide compelling tenant experiences."

2. Question by Saksham Mongia (Dymon Asia): "Are you seeing increased instances of rental negotiations or brand exits? What actions are you taking to protect trading density and the rental lease going forward?"

Answer: "Our malls have a robust track record, minimizing brand exits. We actively enhance our asset classes and maintain a balanced exposure to domestic and international brands. With urban population growth and improved infrastructure surrounding our malls, we maintain a strong consumer base, ensuring sustained demand for our retail spaces."

3. Question by Varun Thakkar (FYERS Asset Management): "How is the revenue share component structured in your retail portfolio, and what proportion of your tenants are currently paying it?"

Answer: "Our agreements are based on the higher of fixed rent or revenue share. About 70% to 75% of our tenants hit the revenue share threshold. Revenue share kicks in when actual sales surpass the fixed rent, and we assess this monthly based on audited sales figures provided by retailers."

4. Question by Parikshit Kandpal (HDFC Securities): "What improvements are being made to drive consumption at matured malls like Phoenix Palladium?"

Answer: "In Bangalore, we've transformed outdated hypermarket space into new fashion anchors which should considerably raise trading density. Similarly, in Palladium, we're revamping parts of the mall, which had a temporary negative impact but is projected to enhance revenue long-term. We foresee substantial consumption growth as we elevate the retail experience with modern brands."

5. Question by Murtuza (Kotak Securities): "Do you have rental agreements signed that will start contributing this year from your commercial real estate?"

Answer: "We have leased about 120,000 sq. ft., with some spaces beginning fit-outs now. Although initial revenue will be small, by Q3 FY26, we expect to see more meaningful contributions as additional leasing discussions firm up and complete fit-outs begin generating income."