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Investing.com - Nomura/Instinet initiated coverage on Phoenix Mills Ltd (NSE:PHNX) with a Reduce rating and a price target of INR1,400.00, citing expectations of slowing retail consumption growth.
The research firm projects retail consumption to grow at just 9% CAGR over FY25-27F, significantly lower than the approximately 40% CAGR achieved during FY22-25. This slowdown is attributed to weak consumption growth at the company’s mature malls, which represent about 65% of total consumption.
Nomura also warns that retail EBITDA margins could face pressure from tenant churn at mature malls and a higher consumption mix from malls in Tier-2 cities, which typically generate lower margins.
The firm views Phoenix Mills’ current valuation of 24x FY26F EV/EBITDA as expensive compared to its pre-COVID multiple of less than 20x, especially considering Nomura’s expectation of a slower consolidated EBITDA CAGR of approximately 13-14% over the next 2-5 years.
Nomura’s FY26F/27F EBITDA estimates fall 9%/12% below Bloomberg consensus, with the firm identifying a potential negative catalyst in 1QFY26F EBITDA potentially missing consensus by 7%, while acknowledging stronger-than-expected consumption in mature malls as a key upside risk.
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