Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated income from operations grew by 12% year-on-year to INR 904 crores.
- Operating EBITDA increased by 8% year-on-year to INR 541 crores.
- Profit after tax rose by 10% year-on-year to INR 295 crores.
- Retail rental income for the quarter was up by 31% over Q1 FY '24.
- Weighted average trading occupancy across major malls improved from 88% in March 2024 to 90% in June 2024.
Negative Points
- Fewer number of movies and lack of blockbuster movie content impacted multiplex performance.
- The summer heatwave resulted in lesser footfalls in many parts of the country.
- F&B and Banqueting revenue declined by 4% due to auspicious days, elections, and dry days.
- Operating cash flow net of taxes and interest was lower by 5% year-on-year.
- Occupancy in Courtyard by Marriott Agra dropped to 63% with the Average Room Rate falling to INR 4,166.
Q & A Highlights
Q: Congrats on the nice ramp-up of your new malls. My first question is with respect to the new mall in Bangalore. It is already generating INR 48 crores of rentals versus your existing Bangalore mall which is generating INR 50 crores on a quarterly basis. Does it look like we've already hit the peak here because it's still 70% occupied? How much more do you think it can go in terms of rentals from here?
A: Puneet, thank you for the questions. Varun this side. Your observation on Mall of Asia is very correct. We have seen a fantastic example in this asset, and that is also reflected in quarterly consumption. The asset stood at 72% occupancy, so over the next 6 to 9 months, we should see it going to about 90%, which should help us establish a new benchmark for consumption at our new malls. The rent should also continue to grow in line with this. Maybe not for FY '25, but for FY '26, we should see this asset nearing the rentals we currently see at Phoenix MarketCity Bangalore.
Q: Citadel mall in Indore, which is still quite young, hasn't grown in this quarter. Anything to read there?
A: Puneet, Citadel is doing well compared to existing assets. It is constructed at a low cost, and the financial metrics are within our benchmark guidance of 12% to 15%. The flat rental Y-on-Y is due to infrastructure improvements by the government in that area, impacting traffic flow. This should evolve in the coming quarters.
Q: The consumption growth in Q1 was a little weak for the mature malls. Is there anything changing that should drive better growth in Q2?
A: Puneet, there are a lot of activities and initiatives we continue to undertake. These take time to have an impact. There is no structural consumption issue or reduction in demand. These are isolated situations in this quarter, mostly in April and May. We saw a ramp-up in May and June.
Q: One Bangalore West has very little inventory. Is there a plan to launch the next phase there?
A: Not as of right now. We're still waiting to understand the development potential and the TDR, as the last phase will be dependent on that.
Q: The trend on decline in consumption has been there for now almost 2-3 quarters. What could justify this?
A: Parikshit, the answer is beyond the question around consumption growth. For example, Phoenix Palladium Mumbai is seeing massive disruption due to adding 250,000 square feet of internal space. This has impacted consumption but was anticipated. We expect the ramp-up in the coming quarters.
Q: Any update on the new Bangalore land that we had purchased last quarter?
A: That Bangalore land is adjacent to our existing Phoenix MarketCity Bangalore. We are looking at different options, including the possibility of expanding. We don't have any specific mix to announce yet.
Q: Any chance of a new tower launch in the Bangalore residential project in FY '26?
A: We are waiting for clarity on the TDR policy, pricing, etc., which will determine the timing of the next phase.
Q: Can you provide an update on leasing status for Asia Towers and Pune?
A: Asia Towers is completed, awaiting the occupation certificate. We have done about 4 transactions in the final stages. For Pune, we have three office towers aggregating to about 1.2 to 1.4 million square feet, with structure completion expected in the next 9 to 12 months.
Q: What kind of rental assumptions did you build in for the Surat mall?
A: We have just completed the excavation in Surat. Construction activities are ongoing. We are still 3 years away from completion, but the guidance is around INR 140 per square foot.
Q: How soon can we see the leasing of the big Pune and Bangalore offices start generating rent?
A: We expect rental generation from January for Phoenix (inaudible) Bangalore. For Pune, we will start generating rent in the next financial year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
