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Informist, Friday, Jan. 31, 2025

By Simran Rede and Rajesh Gajra

MUMBAI – The residential and non-core businesses of The Phoenix Mills Ltd. are inherently variable in nature, the company's management said in a post-earnings analyst call Friday. Due to this, the company adjusted the print for growth in earnings before interest, taxes, depreciation, and amortisation to exclude residential and non-core businesses, Shishir Shrivastava, managing director of the company, said. The real estate developer's operating EBITDA for its core business rose 21% on year in Oct-Dec, whereas its consolidated operating EBITDA, which includes residential and non-core businesses, was flat on year.

The group's operating EBITDA for the December quarter was INR 5.53 billion, and its core business' operating EBITDA was INR 5.61 billion. While the performance of non-core businesses was poor, the core business reported a healthy print. The operating revenue for the core business, which includes retail, offices, and hotels, grew 14% on year during the December quarter while the consolidated operating revenue for the group, including residential and other non-core businesses, was INR 9.75 billion, down 1% on year, according to the company's investor presentation.

Unseasonal rains in Bengaluru and Chennai impacted consumption during the quarter, Shrivastava said. Overall consumption would have been higher by around 1.5% at INR 550 million to INR 600 million in the December quarter if there was no unusual weather change, he added. The Oct-Dec retail consumption grew 21% on year, with only 3% growth in both Phoenix Market City Bangalore and Phoenix Market City and Palladium Chennai.

On year-on-year basis, the retail consumption in Mumbai rose 4% at Phoenix Palladium and 5% at Phoenix Market City Mumbai in the latest quarter. While the Mumbai business posted subdued growth in retail consumption, Phoenix Market City Pune reported 11% growth, one of the highest among all units. Retail consumption in smaller areas such as Phoenix Palassio in Lucknow and Palladium Ahmedabad rose 19% and 63%, respectively.

The company expects to launch at least a million square feet of mall spaces each year from 2027. Phoenix Asia Towers Bangalore has received the occupation certificate and will be launched soon, the company's managing director said. Further, the company expects to complete the development of its offices and one national park in Chennai during 2025. Office developments in Pune, Bangalore, and Chennai will take the company's total commercial office portfolio to nearly 5 million square feet, the company said.

The group level gross debt increased marginally to INR 43.91 billion, while the net debt position post the cash reduction was around INR 23.17 billion as of Dec. 31. The company reduced its average cost of borrowing to 8.6%, which is a continuous reduction as compared to last year. The company's average cost of borrowing was nearly 8.7% as on Sept. 30. The company's management is committed to optimising its debt costs, group Chief Operating Officer Kailash Gupta, said.

The company announced earnings for the December quarter on Friday, which showed a one-time gain of INR 159.9 million helped the real-estate developer arrest the fall in its profit. Phoenix Mills reported a 1% on-year decline in revenue to INR 9.8 billion and profit fell by 5.2% on year to INR 2.6 billion, against the Street's expectations of a consolidated revenue of INR 10.7 billion and consolidated net profit of INR 2.9 billion.

At 1510 IST, shares of the company were up 3% at INR 1,647.60 on the National Stock Exchange.  End

Edited by Ashish Shirke

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