Company Update - Phoenix Mills
Phoenix Mills (PML) has entered into a non-binding term sheet with GIC affiliates for a strategic retail led mixed use development platform. PML will contribute Phoenix Marketcity Mumbai, Phoenix Marketcity Pune, Art Guild House (office), Phoenix Paragon Plaza (office) and Centrium Mumbai (office) as a part of the platform. GIC, on the other hand, will invest by way of a combination of primary infusion and secondary purchase of equity shares for a 26% stake initially at an enterprise value of ~Rs. 5600-5700 crore.
Valuation & Outlook
PML remains a quasi-play on India's consumption story, notwithstanding the weak transient phase in FY21, given the quality of assets, healthy balance sheet & strategic expansion plans. We believe the deal is at favourable terms, given the challenging phase amid Covid-19 led impact. The QIP fund raise and monetisation proceed from the deal will boost the gross cash and equivalent position that was already at healthy levels of ~Rs. 1800 crore. PML is poised to lap up a few assets as well as sail through with comfortable liquidity. With only five to six major retail mall developers currently in India, and given PML's USP of operating large format properties efficiently, it is best placed for overall opportunity in the space. We maintain BUY rating with a revised SoTP based target price of Rs. 795/share. The lower implied cap rate in the deal prompts us to reduce our cap rate estimates of 8% (for operational assets) vs. 8.5%, earlier, resulting in a target price hike.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_PhoenixMills_CoUpdate_Dec20.pdf
Shares of The Phoenix Mills Ltd was last trading in BSE at Rs.689.5 as compared to the previous close of Rs. 682.55. The total number of shares traded during the day was 14607 in over 1545 trades.
The stock hit an intraday high of Rs. 703.05 and intraday low of 671.95. The net turnover during the day was Rs. 10109141.