As domestic brokerage house Motilal Oswal Securities (MOSL) initiated covering with a “buy” recommendation on the stock and raised the target price, shares of Phoenix Mills Ltd. increased by just over 2%. (TP). 1,700, which is a potential increase of 31% over its current market price.
The brokerage firm stated that if it advances the valuation base to FY2025, taking into account two-year returns, a stable rental run-rate, and no pending expenditure, for the retail category, its TP will be 1,700 even if its initial TP is 1,700. The value increases. In the worst-case situation, 29,000 crore will decrease to 23,900 crore. As a result, the price goal increases by 2,000, indicating a capacity of 54% above.
Phoenix Mills’ stock increased 2.19 percent at the closing. On the NSE, 1,323.
Phoenix opened its eleventh mall in Ahmedabad in February 2023, and it plans to deliver malls in Pune and Bangalore in the first quarter of fiscal year (Q1FY) 2024. The commercial EBITDA (office + retail) is anticipated to report a good pre-leasing rate of 90% throughout the course of FY23–25, according to the note.
The brokerage estimates terminal value for forthcoming assets using DCF and a discounted WACC of 11.7% for September 2024 and cap rates of 7-9% for operational retail and office buildings.
Residential assets are valued at NPV, while hotel properties are valued at 15–17.5 times Sep 24E EBITDA. The pre-leasing of its planned malls, it continued, offers a clear near-term view of rental growth.
A protracted downturn in demand, which would significantly affect the operational portfolio and could lengthen the stabilization period for new malls, is one of the key risks, according to the brokerage. However, the company’s ambitions to report a sharp increase in income from office properties could be derailed by a downturn in lease demand.
disclaimer, The views and recommendations given above are of individual analysts or broking companies and not of o2help,
