The Phoenix Mills Ltd (PHOENIXLTD) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY '27 Results Conference Call of The Phoenix Mills Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during this conference, please signal for an operator by pressing star followed by zero on your touchtone phones. Please note that this conference call is being recorded. At this time, I would like to hand over the conference to Mr. Varun Parwal. Thank you and over to you, sir.
Varun Parwal (The Phoenix Mills Ltd): Good morning, everyone. Thank you for joining us to discuss our performance for the second quarter and first half of fiscal year 2027. Our core businesses have continued their strong operating momentum in the second quarter. Revenue from retail, offices, hotel, and our asset management vertical has grown by 16% year-on-year to Rs. 1,055 crores. Our EBITDA from these annuity business lines have increased by 21% to Rs. 669 crores, while profit after tax and before minority interest from this business line has grown by 31% to Rs. 391 crores. For the first half of this financial year, our annuity EBITDA has increased by 20% to Rs. 1,318 crores. Importantly, this growth is being driven by improving performance across our existing operational portfolio and with no new addition to this portfolio for the last 2 years. And we find this very encouraging before the next wave of developments begin contributing meaningfully to earnings. In offices, our portfolio occupancy has increased to approximately 79% in September from 70% in March '26 and 72% in June. Our billing occupancy has also increased, and that's why we see office income growing by 64% year-on-year to Rs. 89 crores in the second quarter, and EBITDA has also increased by a similar margin to 56 crores. As tenants complete their fit-outs and commence operations, we expect the portfolio to continue to contribute progressively more to our income and earnings. Hospitality has also delivered a good resilient performance during the quarter. The St. Regis Mumbai continue to lead the performance with both income and EBITDA increasing by 13% during the second quarter and has continued to maintain its lead as far as average room rates are concerned. We saw a 20% increase in average room rates for St. Regis, while the EBITDA margin remained healthy at 44%. Our development pipeline is also progressing well with projects scheduled for completion and commencement of operations from 2027 onwards. We are also progressing well with respect to excavation and construction activities at Thane, Coimbatore, and Chandigarh, which provides further visibility on the next phase of portfolio growth. Our expansion and densification projects at Lower Parel and Whitefield Bangalore also continue to progress well. With that, I will now hand over the call to Rashmi, who will take you through the retail performance. Over to you, Rashmi.
Rashmi (The Phoenix Mills Ltd): Thank you, Varun, and good morning, everyone. Our retail portfolio delivered another strong quarter with broad-based growth across all our key operating metrics. Importantly, this performance was achieved without any addition to our operational retail areas. Consumption for the quarter stood at 4,685 crores, representing growth of 25% year-on-year. For the first half, consumption increased by 28% to 9,415 crores. What is particularly encouraging is that every mall in our portfolio delivered double-digit consumption growth during the quarter. We continue to pay close attention to the quality of this performance. Excluding jewelry and electronics, consumption grew by 22% during the quarter. Fashion and accessories, which account for approximately 60% of our trading area, grew by 22%. Food and beverages grew by 21%, while entertainment grew by 16%. This shows that growth continues to be healthy across the customer's discretionary wallet and is not dependent on 1 or 2 categories. A notable portion of incremental consumption during the quarter
Rashmi (The Phoenix Mills Ltd): from brands introduced over the past year, net of planned store closures. These additions are strengthening the customer proposition and supporting productivity across the wider retailer mix. Re- rental income grew by 15% to 605 crore during the quarter and by 16% to 1,200 crores during the first half. Minimum guarantee rentals continue to grow well while revenue-share income increased significantly during the quarter. Phoenix Mall of Asia has established itself as one of Bengaluru's leading premium retail destinations. During Q2, it continued to scale with consumption increasing by 68%, rental income by 44%, and trading occupancy reaching 96%, up from 84% a year ago. Trading density, which is retailer sales per square feet of trading area at the center, crossed 3,300 psf. Our repositioning initiatives also continue to translate into stronger operating performance. At Phoenix Marketcity, Bangalore, consumption increased by 19% and rental income grew by 25% during Q2, while trading occupancy improved to 93% from 82% a year ago. At Phoenix Avenue of Stars, Pune, consumption grew by 21%, rental income increased by 16%, and trading occupancy improved to 90% from 82% a year ago. Both centers are more than 97% leased. The results at these assets reinforce the benefits of active asset enhancement, which remains an important part of our strategy. Similar initiatives are underway across select assets in the portfolio. At Phoenix Palassio in Lucknow, we are converting part of the existing non-F&B space into an enhanced F&B offering. We are also adding another floor to the mall along with other changes which will add approximately 100 additional stores to the center. At Phoenix Palladium, we are refreshing the tenant mix and reconfiguring select spaces as we prepare for the addition of the new retail area. The expanded complex will allow us to introduce several new brands, including a number of first-time brands within our portfolio and in India. In the immediate next phase of expansion, we will be adding 150 stores to the center. These initiatives have temporarily affected trading occupancy at some assets. We expect occupancy to improve across our portfolio as the new stores and upgraded format commence operations. With a high-quality portfolio of Grade A malls across India and a consistent track record, we are a preferred partner for many renowned brands looking to open their first stores or expand their presence across the country. During the first half, we completed over 675 leasing deals, covering approximately 1.8 million square feet across our operational and under-construction portfolio. Leasing across our new retail destinations and expansions is also progressing well. These assets have attracted several marquee brands and reflect the quality of retailer interest across our new destinations and expansions. We also see significant opportunities within our existing portfolio. Leases covering around 50% of our retail area come up for expiry between FY '27 and FY '29, giving us the opportunity to refresh the brand mix in a strategic manner and reprice space. Retail EBITDA grew by 18% to 639 crores during the quarter and by 17% to 1,200 six 1,264 crores during the first quarter, supported by rental growth, operating leverage, and cost discipline. With resilient cust- customer demand, ongoing asset enhancement, the upcoming renewal cycle, good leasing progress, and an ongoing increase in demand from new brands wanting to enter India, we have a long runway for sustainable growth in consumption, rentals, and EBITDA. Before I hand over, a brief update on the festive season. Across our portfolio, all malls have a range of festive experiences and activations designed to bring the spirit of Diwali to the cities. At Phoenix Palassio in Lucknow, a Ramayana-themed Diwali decor was complemented by a spectacular drone show and large firework displays to mark the opening. Mall of Asia introduced The Festival of Lights,
Rashmi (The Phoenix Mills Ltd): So, I will now hand the call over to Kailash to take you through the next set of highlights.
Kailash (The Phoenix Mills Ltd): Thank you, Rashmi. And good morning, everyone. Let me take you through our financial performance, cash flow, and balance sheet. For Q2, consolidated revenue stood at 1,000, 153 crores and operating EBITDA at Rs. 710 crores. EBITDA margin improved to 62%. Profit after tax, and after minority interest, was Rs. 326 crores for the quarter. As Varun mentioned, our annuity businesses delivered strong growth during the period. Consolidated growth was relatively lower because resi revenue is recognized upon unit handover and carry very, and can carry between periods. During H1, we recognized 62 crore of residential revenue compared with the significantly higher contribution in the corresponding period last year. We are, we have already sold out the units of 120 crore more, which is yet to be booked. So this revenue will reflect in the H2 of current financial year. Cash generation remained robust. In Q2, net cash from operations increased by 20% to Rs. 711 crores. Operating free cash flow after tax and net interest grew by 22% to 631 crore. Of this, approximately 570 crore came from the annuity businesses, representing a growth of 28%. For the first half, operating free cash flow from our annuity businesses increased by 30% to Rs. 1,137 crores. Total CAPEX outflow during Q Q2 was 389 crore, out of which 349 crore was towards the construction cost, and the remaining towards the FSI and the land cost. As of September 2026, gross debt was at Rs. 6,117 crores, and the liquidity was at 2,638 crore, resulting into a net debt of Rs. 3,479 crores. Net debt reduced by 179 crore during the Q2, and was Rs. 319 crore higher compared to March 2026. Net debt-to-EBITDA remained comfortable at 1.2 times, while the average cost of debt declined to to 7.66%. Our balance sheet remain conservatively leveraged, providing the flexibility to fund our commitment development program. We are also expecting some credit rating upgrades, which may be, you know, coming next one or two weeks time. Let me now provide brief update to you on ISML acquisition. In July 2025, we announced the acquisition of CPB Investments 49% in ISML. Tranche one was completed in November 2025, increasing the PML stake from 51% to 58.33%. In October 2026, the NCLT approved the, approved the selected capital reduction scheme forming part of tranche two. We expect the capital reduction to be completed in November 2026, following which PML stake in ISML will increase from 58.33% to 68.1%. The capital reduction consideration is 1,350 crore. With this, we will now open the floor for the question-and-answer session.
Moderator: Thank you very much, sir. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone who wishes to ask a question may enter star followed by one on the touchtone telephones. If you wish to remove yourself from the question queue, you may enter star followed by two. Participants are requested to please use only handsets while asking a question. We will wait for a moment while the question queue assembles. The first question is from the line of Puneet from HSBC. Please go ahead.
Puneet (HSBC): Yeah. Thank you so much, and congratulations on the great performance once more. My first question is, you know, if I look at the breakup of your consumption mix, I see food and beverage, hypermarket also has picked up quite nicely, while the trading area has remained pretty much same. You still attribute about, you know, 10-11% there. Can you talk about what's happening there, specifically?
Varun Parwal (The Phoenix Mills Ltd): Sure, Puneet. I think, before I hand over to Rashmi to share more highlights, as you're aware, on our, F&B area mix, we had launched Gourmet Village in Phoenix Palladium last year. And
Varun Parwal (The Phoenix Mills Ltd): success of Gourmet Village in Phoenix Palladium. We are also rolling out this experiential fine dining format across our other centers. For example, Rashmi covered during her call that we are creating this unique F&B offering in Palassio Lucknow at the moment. But a general update that has happened is that with the introduction of new fine dining restaurants, they take some time to pick up speed and reach a level of optimization, and you're seeing that playing out in the numbers right now. And I think same for you know more than hypermarkets, we've introduced premium, more optimized, gourmet shopping centers within our malls, and the improvement in the hypermarket number is actually attributable to these smaller, more efficient gourmet formats.
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