3 June 2013
4QFY13 Results Update |
Sector: Real Estate
Phoenix Mills
BSE Sensex
19,760
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel. Perf. (%)
S&P CNX
5,986
PHNX IN
144.8
40.5/0.7
293/155
2/33/25
CMP: INR279
TP: INR301
Buy
Financials & Valuation (INR b)
Y/E March
Net Sales
EBITDA
Adj PAT
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
2013 2014E 2015E
4.7
2.6
0.8
5.8
-20.3
124.7
4.7
6.7
40.3
48.1
2.2
22.9
0.7
9.9
4.8
1.1
7.8
34.1
130.1
6.0
9.9
30.0
35.9
2.1
13.5
0.7
12.9
6.0
1.9
13.3
70.2
139.9
9.5
11.6
26.5
21.1
2.0
10.3
1.1
Phoenix Mills' 4QFY13 standalone EBITDA was in line with est. at INR469m
(+32%YoY, +1% QoQ). Revenue stood at INR722m (+20%YoY, +4%QoQ, v/s est.
of INR706m); EBITDA margin down by 2pp QoQ to 66%. PAT stood at INR361m
(v/s est of INR333m). FY13 consolidated revenue stood at INR4.7b (v/s est. of
INR4.5b), EBITDA of INR2.6b (in-line) and PAT of INR842m (v/s est of INR1b).
High street Phoenix (HSP) rentals grew +5%QoQ/+23%YoY to INR653m in
4QFY13, led by +17%YoY growth in consumption. Average rentals grew
+4%QoQ and +17% YoY to INR212/sf/m in 4QFY13. FY13 rental at HSP stood at
INR2.4b v/s our estimate of INR2.32b in FY13.
During 4QFY13, PHNX has witnessed moderation in ramp up progress across
its market city retails, barring Chennai. Chennai mall has shown strong ramp-
up progress as expected due to its very attractive locational advantage. In
terms of trading density, the mall has already surpassed other three market
city malls, which got operational almost 9-12 months ahead of it.
After a strong 1HFY13, the monetization pace in phase IIs of the market city
projects moderates in 3QFY13 and the trend continued in 4Q as well. PHNX
plans to launch 3-4msf of residential projects over next 12 months including
Bangalore East (1msf), Phase II of Bangalore West (2msf), Pune (0.3msf) and
last phase of Chennai (0.4msf).
Due to steady customer collections and negative working capital status in
One Bangalore West project, the SPV Palladium Constructions has bought
back INR781m worth of share, leading to an inflow of INR547m to PHNX in
4QFY13 (owing to its 70% stake in SPV).
The board has approved stake purchase of INR1.4b in various market city
projects over next 24 months. This comprises: (1)Purchase of Edelweiss
Property Fund portfolio in PML group projects for INR690m; (2) Purchase of
IL&FS 24% stake in Vamona Developers (Phoenix Market city, Pune) for
INR716m.
With these, PHNX would have overall capital commitment of INR1.9b for
raising stakes in various SPVs over FY14-15.
Consolidated net debt stood at INR17.7b (net DER 1x), up by INR3.4b QoQ on
account of consolidation of Bangalore East SPV in 4Q.
Sandipan Pal
(Sandipan.Pal@MotilalOswal.com); +91 22 3982 5436
Investors are advised to refer through disclosures made at the end of the Research Report.

Phoenix Mills
Operational highlights
Revenue/EBITDA in line with estimates
Phoenix Mills' 4QFY13 standalone EBITDA was in line with est. at INR469m
(+32%YoY, +1% QoQ).
Revenue stood at INR722m (+20%YoY, +4%QoQ, v/s est. of INR706m); EBITDA margin
down by 2pp QoQ to 66%. PAT stood at INR361m (v/s est of INR333m).
FY13 consolidated revenue stood at INR4.7b (v/s est. of INR4.5b), EBITDA of INR2.6b
(in-line) and PAT of INR842m (v/s est of INR1b).
Key contributors to consol revenue have been Pune Market city (INR1.5b), Shangri-
La Hotel (INR160m for 2months of operations).
HSP continues to ride on solid foundation -posts 17%YoY growth in average
rental
High street Phoenix (HSP) rental grew +5%QoQ/+23%YoY to INR653m in 4QFY13,
led by +17%YoY growth in consumption.
Average rentals grew +4%QoQ and +17% YoY to INR212/sf/m in 4QFY13.
Incremental deals at Palladium are happening at INR350-400/sf/m of minimum
guarantee.
Brands like Nikon, UCB Kids, Avirate, VANS and Mai Tai became operational during
4QFY13.
Strong consumption growth has led to meaningful improvement in revenue
sharing component. As per management, during the peak consumption month of
Jan'13 the top 10 stores generated Rentals in the range INR600-1400/sf due to
revenue share.
FY13 rental at HSP stood at INR2.4b v/s our estimate of INR2.32b in FY13. While we
model in for 11% CAGR in HSP rental over FY13-15E, it could have significant upside
risk with ~0.4msf of area coming under renewal over next 12-24months with
potential re-pricing growth of 20-25%.
Rental from HSP (INR m) witnessed steady growth and…
…expect trend to continue with booming consumption (INR m)
Source: Company, MOSL
3 June 2013
2

Phoenix Mills
Ramp-up in Chennai Mall commendable; monetization pace slowed down
in Phase IIs
During 4QFY13, PHNX has witnessed moderation in ramp up progress across its
market city retails, barring Chennai.
Both in terms of incremental occupancy and growth in trading density/
consumption, there has been sequential stagnancy, particularly in Pune Market
City.
However Chennai mall has shown strong ramp-up progress as expected due to its
very attractive locational advantage.
In terms of trading density, the mall has already surpassed other three market city
malls, which got operational almost 9-12months ahead of it.
After a strong 1HFY13, the monetization pace in phase IIs of the market city projects
moderates in 3QFY13 and the trend continued in 4Q as well.
It achieved incremental sales of INR1.2b in 2HFY13 and INR10.4b in FY13. Post
sharp increase in ASP at One Bangalore West to ~INR10K+/sf, it managed presales
of INR0.6b in 2H (v/s INR5.6b in 2QFY13 when it was launched with ASP of INR7K/
sf).
PHNX plans to launch 3-4msf of residential projects over next 12 months including
Bangalore East (1msf), Phase II of Bangalore West (2msf), Pune (0.3msf) and last
phase of Chennai (0.4msf).
Trend of key operating parameter across market city projects (INR m)
3QFY12 1QFY13
Footfall (m)
1.3
1.7
Consumption
824
896
Consumption/footfall (x)
629
524
Occupancy (%)
63
69
QoQ change (pp)
7
Rentals
127
142
Recovery
99
112
Revenue
226
254
QoQ Growth (%)
EBITDA
107
126
QoQ Growth (%)
Cash recovery
O/S debtors
Pune
Banaglore
Kurla
Chennai
2QFY13 3QFY13 4QFY13 2QFY13 3QFY13 4QFY13 2QFY13 3QFY13 4QFY13
FY13
2.7
4.1
3.5
1.3
1.9
2.0
5.3
5.3
1,102
1317
1253
810
1018
1089
671
829
906
299
408
322
361
643
539
534
127
56
76
79
81
66
77
79
70
80
80
61
7
3
2
4
11
2
11
10
-
11
152
168
184
141
160
173
186
211
230
125
112
140
131
88
97
111
103
101
121
92
264
308
315
229
257
284
288
312
351
217
17
2
12
11
8
13
136
158
184
127
160
204
197
192
250
123
16
16
26
28
(2)
30
297
300
326
268
250
284
264
283
287
NA
126
132
144
109
116
182
220
248
394
NA
Source: Company, MOSL
Management sees no cash flow pressure amidst limited capex…
Despite recent moderation in monetization pace of Phase IIs in market city
developments, PHNX stands with reasonable cash flow visibility from presales
achieved over past 12months. It has collected ~INR7.2b till FY13, out of total
presales of INR15.7b.
Barring Agra Hotel and Chennai luxury mall (0.2msf), there is no major capex left
towards annuity projects.
3 June 2013
3

Phoenix Mills
Due to steady customer collections and negative working capital status in One
Bangalore West project, the SPV Palladium Constructions has bought back INR781m
worth of share, leading to an inflow of INR547m to PHNX in 4QFY13 (owing to its
70% stake in SPV).
…albeit gearing is unlikely to decline in FY14 due to (a) construction spending,
and (b) additional stake acquisitions
However it expects no major decline in leverage over FY14, as the cash flow will
be spent towards meeting the construction requirements in the development
business, where it targets spend ~INR3b in FY14.
In addition to its ongoing stake purchase from Horizon (in Bangalore East Project)
and Kshitij (in Chennai project), the board has approved stake purchase of INR1.4b
in various market city projects over next 24 months. This comprises:
Purchase of Edelweiss Property Fund portfolio in PML group projects for
INR690m.
Purchase of IL&FS 24% stake in Vamona Developers (Phoenix Market city, Pune)
for INR716m.
With these, PHNX would have overall capital commitment of INR1.9b for raising
stakes in various SPVs over FY14-15.
Consolidated net debt stood at INR17.7b (net DER 1x), up by INR3.4b QoQ on
account of consolidation of Bangalore East SPV in 4Q.
Valuation and view: Assets stabilization to augment RoCE
With the commencements of Chennai Mall and Hotel Shangri La, PHNX's asset-
heavy model has almost fully converted into a strong earning model, which aids a
play on booming domestic consumption story. We estimate 25% CAGR in rental
income (including hotel) over next 2-3 years to INR6b in FY15 as against INR3.8b in
FY13.
With the stabilization of these assets, coupled with steady monetization of market
City phase II (residential and commercial projects), we expect a steady
improvement in capital efficiency (4-5pp expansion in RoCE/RoE) over FY13-15E.
Encouraging off-take in Phase II projects would be crucial for reduction in leverage
level and to support its continuous stake increase in various maturing SPVs.
Key triggers for the stock would be (1) operational ramp-up at Market City SPVs,
(2) de-leveraging, and (3) value unlocking from Phase IV at HSP, where higher FSI
could lend further upside.
The stock trades at 21.1x FY15E P/E, 2x FY15E P/B, and 8% discount to our NAV of
INR301. Maintain
Buy
with TP of INR301.
3 June 2013
4

Phoenix Mills
Phoenix Mills: an investment profile
Company description
Phoenix Mills is a pioneer in the development of
largescale, mixed-format retail development in India. It
is a unique, low-risk play on the booming domestic
consumption story with no retail-specific risks. Through
its subsidiaries and associate companies it is undertaking
40 retail/ hospitality projects, totaling ~50msf, across
India. It owns one of the most successful malls in India,
High Street Phoenix (HSP), in Parel, Mumbai. We
estimate, with the commencement of market city
projects and Shangri-la hotel, the rental income to
increase from INR2.5b in FY12 to INR6.2b in FY15.
Chennai project), the board has approved stake
purchase of INR1.4b in various market city projects
over next 24 months. This comprises: (1) Purchase
of Edelweiss Property Fund portfolio in PML group
projects for INR690m; (2) Purchase of IL&FS 24% stake
in Vamona Developers (Phoenix Market city, Pune)
for INR716m.
Valuation and view
Key triggers for the stock would be (1) operational
ramp-up at Market City SPVs, (2) de-leveraging, and
(3) value unlocking from Phase IV at HSP, where
higher FSI could lend further upside.
The stock trades at 21.1x FY15E P/E, 2x FY15E P/B, and
8% discount to our NAV of INR301. Maintain
Buy
with
TP of INR301.
Key investment arguments
According to the Global Retail Development Index
(GRDI), organized retail in India is set to increase from
multi-fold. We believe PHNX is well poised to benefit
from this.
PHNX's growth story is ready for take-off, with the
stabilization of market city malls and monetization
at phase II development projects, which would
trigger de-leveraging over FY14.
Sector view
Recent developments
In addition to its ongoing stake purchase from
Horizon (in Bangalore East Project) and Kshitij (in
RE sector has been an outperformer over past couple
of quarters with multiple operational and
nonoperational headwinds subsiding driven by
favorable macro, monetary easing and likelihood of
interest rate cut. We expect developers with focused
business approach and rationalized product mix are
going to derive benefit and likely to post stronger
operating performances here on.
Comparative valuations
P/E (x)
P/BV (x)
EV/Sales (x)
EV/EBITDA (x)
FY14E
FY15E
FY14E
FY15E
FY14E
FY15E
FY14E
FY15E
Phoenix
35.9
21.1
2.1
2.0
6.5
4.8
13.5
10.3
DLF
42.1
20.1
1.3
1.3
5.8
5.2
15.2
12.0
Unitech
18.3
15.1
0.7
0.5
4.1
3.8
23.9
19.4
EPS: MOSL forecast v/s consensus (INR)
MOSL
Forecast
7.8
13.3
Consensus
Forecast
11.2
19.6
Variation
(%)
-30.1
-32.3
FY14
FY15
Target price and recommendation
Current
Price (INR)
279
Target
Price (INR)
301
Upside
(%)
7.9
Reco.
Buy
Stock performance (1 year)
Shareholding pattern (%)
Mar-13
Promoter
Domestic Inst
Foreign
Others
3 June 2013
65.9
5.3
22.8
6.0
Dec-12
65.9
5.4
22.4
6.4
Mar-12
65.9
5.0
23.2
5.9
5

Phoenix Mills
Financials and Valuation
3 June 2013
6

Phoenix Mills
N O T E S
3 June 2013
7

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Phoenix Mills
No
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No
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