Buy Phoenix Mills - Bangalore West Launch Attracts Good Response - Citi

Citi Research has come out with a report on Phoenix Mills Limited saying the company's stock is a "Top pick in India Property". Phoenix continues to be Citi's top pick (along with Prestige Estates) given the traction seen in the market cities.

The company has ~80% NAV on the ground and its growing rental annuities should bring down debt, which has peaked at ~0.7x. Legacy asset HSP is also seeing same-store sales growth of ~20%.

Phoenix Mills recently launched its new project 'One Bangalore West' with ~1msf phase 1 in Rajajinagar. From Phase 1, the company has managed to sell ~700k sqft. Construction on phase 1 is expected to begin in Oct'12 with excavation for towers 1-3 complete and for towers 4-5 in progress.

The realizations from the project has been ahead of Citi's expectations as the project has seen a healthy response, with sales booking of ~Rs5.3bn. Base realization of ~Rs7,200psf (average realization of ~Rs7,500psf) is ahead of Citi's estimate of ~Rs6,500psf (HSP = Higher Sales and Profits).

The ~3msf Bangalore West project is Phoenix's largest residential project consisting of nine high-rise towers spread over ~17 acres. The project SPV is 70% owned by Phoenix Mills, with the balance 30% stake with IL&FS. The primary configurations are 2-4BHK residences and penthouses.

Source : Equity Bulls

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