CRISIL has placed its rating on the long-term bank facilities of Phoenix Mills Limited (PML; flagship company of the Phoenix Mills group) on 'Rating Watch with Negative Implications'.
The rating action follows measures taken by various state governments towards containment of COVID-19 which includes temporary closure of non-critical establishments, inter-state transportation etc. along-with advisory against travel and visiting areas of mass gatherings. These measures including mandatory closure of its retail assets could lead to delay in the collection of lease rentals from tenants, for the affected months.
While, most of the state government's measures are applicable till April 14, 2020, revocation of the measures will be contingent upon directive from the central government and extent of spread of COVID-19. A sustained long period of closures can result in significant deterioration in credit profile of the company. On the other hand, a faster reversal to normalcy may contain the extent of deterioration likely in credit quality of the company. That said, the ability of the business to revert back to operational stability and any relief measures given by the government will be key rating sensitivity factors, and CRISIL will continue monitoring these events.
The Phoenix Mills group enjoys healthy liquidity and maintains debt service reserve accounts (DSRA) covering 3 months of debt servicing obligations for all its assets. Cash and cash equivalents were Rs 489 crore (including DSRA) as on March 31, 2019. The group also had access to unutilised bank lines of Rs 740 crore as on March 31, 2019. The group is in the process of enhancing its bank lines to manage the cash flow mismatches if such a situation continues beyond a 9 month period.
The rating continues to reflect the group's leadership position in the Indian retail mall segment. The rating also factors in the group's diversified revenue portfolio and comfortable financial risk profile. These strengths are partially offset by exposure to project risks because of significant expansion plans, and vulnerability to cyclicality in the real estate sector.
Shares of The Phoenix Mills Ltd was last trading in BSE at Rs.575.4 as compared to the previous close of Rs. 541.7. The total number of shares traded during the day was 1273 in over 247 trades.
The stock hit an intraday high of Rs. 606.25 and intraday low of 541.15. The net turnover during the day was Rs. 716344.