Phoenix Mills Ltd
NSE:PHOENIXLTD
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
1 095.5286
2 044.7172
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Phoenix Mills Ltd
You don't have any saved screeners yet
Good day, ladies and gentlemen, and welcome to the Q1 FY '23 Results Conference Call of the Phoenix Mills Limited. [Operator Instructions] The management of the company is being represented by Mr. Shishir Shrivastava, Managing Director; Mr. Anuraag Srivastava, Group Chief Financial Officer; and Mr. Varun Parwal, Deputy Chief Financial Officer. [Operator Instructions] Please note that this conference is being recorded.
At this time, I would like to hand the conference over to Mr. Shishir Shrivastava. Thank you, and over to you, sir.
Thank you. A very good afternoon, ladies and gentlemen. We welcome you to discuss the operating and financial performance of the first quarter of FY '23. Quarter 1 FY '23 has historically been the best ever quarter, best ever first quarter we've had across our retail and hospitality operations. 2 sectors that were hit hard by the pandemic. I hope you've had a chance to look at the results presentation shared with -- shared by us. It is uploaded on the stock exchanges as well as on our website.
I will now take you through the key highlights of the results and we'll refer to relevant slides of the results presentation from time to time. We will start with the performance of our retail portfolio. Please refer to Slide 3 onwards of the results presentation. Consumption in Q1 FY '23 was at INR 21,905 million. This is a 23% growth over Q1 FY '20 consumption. If we exclude Phoenix Palassio, Lucknow, the contribution by that mall, we have seen 11% like-to-like growth compared to Q1 FY '20.
Q1 FY '23 saw the highest quarterly consumption done at our malls in the first quarter of any financial year. And please note that this was achieved despite the end of season sales being delayed to the month of July this year. Consumption was robust across categories. Some of the top-performing categories were jewelry, which was up 115% from Q1 FY '20. Multiplex, which was up 73% from Q1 FY '20 and electronics, which were up 33% from Q1 FY '20.
If I may draw your attention to Slides 4 and 6. We have seen the retail consumption momentum continue in the months of July and August till date. For the month of July 2022, we recorded consumption of INR 7,920 million, up 33% compared to July 2019. July benefits from the delayed start of the end of season sale as well as revival of promotional activities and events across our malls.
You may see images on Slides 5 and 6 of performances by prominent artists, which remain a big crowd puller across our centers. Incidentally, the July '22 consumption is the highest ever consumption recorded in our history and surpasses the previous high witnessed in December 2019.
If I may draw your attention to Slide #7. We have achieved consumption of almost INR 30,000 million year-to-date, April through July '22, up 26% compared to the same period pre-COVID. If we annualize the year-to-date performance, I would estimate that we can target an annual consumption of at least INR 90,000 million. We believe that we could surpass this figure of INR 90,000 million on account of multiple reasons. The first one being new trading area becoming operational across existing malls, sustained consumption growth, our new mall openings in the second half of this financial year. This is, of course, subject to there being no disruption in business operations.
If you turn to Slide 8, you will notice the retail expansion that we have outlined at our flagship retail property, Phoenix Palladium, Mumbai. The GLA in Phoenix Palladium was at about 0.77 million square feet in FY '22. We have now activated a further 150,000 square feet of new area across the lower ground floor, first and second floors of Palladium, along with additional new areas in the zones of Courtyard and the East zone of Phoenix Palladium in this quarter.
In addition, we will add another 250,000 square feet of anchor space coming up opposite to PVR in 2024 and another 200,000 square feet or more area in project Rise, which will become operational in 2025. Once the entire expansion program is completed in 2025, Phoenix Palladium will be approximately 1.43 million square foot GLA Mall, the largest in our portfolio.
If I may draw your attention to Slides 9 through 11 for a quick glimpse of the new store openings at Phoenix Palladium between July and August and across categories of fashion, F&B and entertainment.
In line with our consumption, our rental and EBITDA growth has also come strong. First quarter FY '23 rental income was approximately INR 3,224 million, up 24% compared to quarter 1 of FY '20. Our retail EBITDA for this quarter was about INR 3,248 million, up 27% compared to the first quarter FY '20. Our collections during first quarter FY '23 stood at about INR 5,253 million. And going ahead, one can expect quarterly run rate of at least INR 5,000 million, here onwards. For a perspective, our FY '22 retail collections were INR 11,740 million.
If I draw your attention to Slide #25. In today's inflationary environment, our retail and hospitality business, which are consumer-facing, stand to benefit. Higher prices of goods sold at the malls translates into a higher consumption, which translates into higher rental income for us by way of the incremental revenue share. At a broad level, approximately -- there was an incremental rental contribution on account of revenue share beyond the minimum guarantee rent of approximately 13%.
If I may draw your attention to Slide 25, Bangalore has shown an incremental rent on account of revenue share of about 18%; Phoenix MarketCity, Pune at approximately 16%; and Phoenix MarketCity, Mumbai at approximately 15%. Again, for a comparison, pre-COVID, the revenue share contribution would vary in the range of about 10% to 12%.
Once our -- moving on to our under construction malls. And if I may draw your attention to Slide #12. Phoenix Citadel, Indore with a gross leasable area of approximately 1 million square feet has achieved 83% leasing occupancy. Palladium, Ahmedabad with a GLA of approximately 770,000 square feet has achieved 98% leasing occupancy. We expect to commence operations for both of these malls in the second half of this year, and we are working at a furious pace to deliver the project.
Phoenix Mall of the Millennium at Pune with a GLA of about 1.1 million square feet has achieved 73% leasing occupancy. Phoenix Mall of Asia, Bangalore with a GLA of approximately 1.2 million square feet has achieved 76% leasing occupancy. We expect to commence operations for Phoenix Mall of Millennium, Pune and Phoenix Mall of Asia, Bangalore in the first half of FY '24.
At our flagship property at Lower Parel, Mumbai, we have commenced the short piling work for project Rise in June 22. For our upcoming mall led development at Kolkata, we have recently received the approvals of building plans in April '22 and expect to commence construction in the coming months.
Additionally, with the expansion, we have also commenced work on our offices at Phoenix Asia Towers at Hebbal, Bangalore, and commencing work at the Millennium Towers, which form part of the mixed-use development at Wakad, Pune. Once our under construction malls have become operational, Phoenix will have an operational portfolio of approximately 13 million square feet.
We continue to evaluate the growing consumption strength and patterns across key Indian cities and specific micro markets and continue to explore newer opportunities for us to benefit from this potential. The potential to tap the discretionary spending of urban India is huge in our view. And as owners and operators of one of the largest retail portfolio in India, we are committed to provide the urban Indian consumer the opportunity to experience the best of retail brands, entertainment and superlative F&B options from across the world.
I will now request Anuraag to take you through the office, hotels and residential section and overall financial results. Thank you.
Thank you, Shishir. I would now take you through the commercial portfolio. If you can refer to Slide 27. During this quarter, we saw gross leasing of 1.9 lakh square feet, of which 1.3 lakh is the new leasing and 0.6 lakh is the renewals. Total office income stood at about INR 403 million, which is up 10% year-on-year, and total EBITDA stood at INR 235 million. Our collections from this business in this quarter was INR 464 million, which represents a collection efficiency of about 95%.
For updates on hotels, please refer to Slide 30 to 33. I would first cover the St. Regis. However, across both our hotels, the business has shown a strong improvement on back of higher occupancies and ARRs on account of social events, corporate events and pickup of food and beverage segments. Both our hotels saw occupancy and ARRs, which were higher than pre-COVID period.
Now coming specifically to each property. At St. Regis, our total income stood at INR 830 million, which is about 19% up over quarter 1 of FY '20. Occupancy at about 85% which is up by 3 percentage points from Q1 FY '20. ARR close to INR 12,000 million at INR 11,997 million, again up 10%. Operating EBITDA stood at INR 318 million, which is a 26% growth on the quarter FY '20 -- quarter 1 FY '20. Hotel maintained a strong revenue performance in July as well as with room occupancies at 81% and ARR is at around INR 10,800 million.
July 2022 revenue is approximately 15% ahead of the July 2019 numbers. The operating performance at St. Regis, Mumbai has surprised most parameters in the past couple of months, led by the remission of foreign travel, domestic corporate travel, social events and staycation. These factors provide an excellent visibility of high occupancy and ARRs in the coming months.
Additionally, we expect the venues on 38 floor to start generating revenue from the coming months, which will further boost our revenues. On the Courtyard Marriott Agra property, the total income was INR 40 million, up 7% from quarter 1 FY '20. And for the occupancy stood at 62% and ARR at INR 3,733 million, which is up at 11% from quarter 1 FY '20. For the month of July, the occupancy was 72%, which is quite high and ARR was at INR 3,673 million.
Moving on to residential business, which is covered in Slide 35 onwards. We have witnessed a very good traction in residential sales as well, mainly led by reconfiguration of our Kessaku property into smaller units and robust demand of ready-to-move-in inventory. We achieved an overall sale of INR 704 million in this quarter, out of which INR 408 million worth sales is pending registration. Collections were quite robust at INR 536 million.
This was the business update. And now I would like to move towards the financial results, which are there in Slides 37 to 39. Some of the key highlights are: income from operations in quarter was about INR 5,744 million. This is up 181% year-on-year. Last year was the covered impacted quarter. EBITDA for Q1 FY '23 was INR 3,229 million. This is up 10% if you compare to quarter 1 FY '20.
On Slide 39, we have represented how the consol EBITDA looks on a like-to-like basis after making certain adjustments on both periods, which are -- which we thought were the true representation. We have removed contribution of Classic Mall, which we have acquired on a fully -- on a -- and our Classic Mall is a subsidiary of ours. We had acquire Classic Mall in quarter -- last quarter.
Further, we have removed EBITDA contribution from Phoenix Palassio in quarter 1 FY '23. We have adjusted EBITDA contribution from our residential business from quarter 1 FY '20, which saw the revenue recognition of Tower 6 in quarter 1 FY '20. After making that above adjustment, consol EBITDA shows a growth of 21% on a like-to-like basis. We have reported a quarter 1 FY '23 PAT of INR 7,187 million. PAT has positively impacted owing to exceptional items of INR 5,568 million.
PML completed the acquisition of balance 50% stake held in Classic Mall during quarter 1 FY '23. Pursuant to this acquisition, remeasurement of previously held stakes of 50% and then the associate investment in Classic Mall at fair value as required as per the Ind AS 103 leading to a positive impact on PAT. If we adjust the reported PAT on the above exceptional item, we are looking at an 18% growth on the adjusted Q1 FY '23 PAT over Q1 FY '20.
Moving on to debt and liquidity and funding. Slide 40 to 42 are the reference slides. Our consolidated gross debt stood at INR 41,865 million on 30 June 2022 as compared to INR 43,785 million at the end of quarter 4 FY '22. There's a reduction of debt of about INR 1,930 million. On the operational portfolio, there has been a decline in debt due to gradual repayment as well as few planned repayments that we have done during the quarter.
On the under-construction portfolio, sequential increase of debt is on account of pending for our under construction mall at Ahmedabad and Indore and Bangalore. Average cost of borrowing is up about 15 bps at 745, 7.45% from 7.30% in March 22. Currently, a lower cost of borrowing stands at about 6.95%. As the overall interest rates in the economy starts to rise, our effort will be to minimize the impact of this on our cost of borrowings.
Despite RBI increasing rates of 140 bps since May 22, our borrowing costs have only got up by 15 bps so far, although the cost of debt is likely to move up in coming months as the banks pass the rate hikes and we hit our refinancing windows. We have potentially another 30% of debt portfolio, which we can aim for refinancing during FY '23 towards the quarter 3 and quarter 4, which could yield us interest rate benefits of 30 bps at a portfolio level as compared to the rate increase on the repo rate increases.
Liquidity. Our liquidity position as on 30th June 2022 was almost around INR 21,772 million. This excludes the INR 8,070 million in unutilized OD accounts, which we can draw at any point of time. At a group level, our net debt is INR 20,094 million and PML shares of net debt is about INR 16,899 million.
I wanted to take you through the cash flows as well. Our gross collections from the business was at INR 7,164 million for the first quarter of FY '23. Retail business saw collections of INR 5,253 million, commercials at INR 464 million, residentials, INR 536 million and hotels contributed to about INR 911 million. On 30th June 2022, we received a balanced commitment of about INR 4 billion or INR 4,000 million from GIC. As a result, we now hold 67.1% in Phoenix MarketCity, Pune, Mumbai and the commercial assets forming part of Phoenix MarketCity, Mumbai.
Our CapEx on under construction, retail and office projects was INR 2,739 million in quarter 1 FY '23. We have 4 malls under construction at present. And pace of spending will pick up going ahead as they enter into the final state of completion. Further, we have started construction of the project Rise during the quarter. Our cash flows from operating activities was at INR 3,417 million, adjusting for interest paid of INR 875 million our operating free cash flow for this quarter was INR 2,543 million.
It is pertinent to note that our operational free cash for full year FY '22 was INR 5,011 million. This number was INR 6,000 million pre-COVID. Thus, our start of the year has been very strong with quarter in itself, quarter 1 itself accounting for around 42% of our FY '20 operational free cash flow. We are bullish on our business prospects and with a strong balance sheet position, our focus is now to deliver on our under construction projects in a time -- in time and judiciously deploy our capital to expand our portfolio.
With this, we close our opening remarks, and we'll open the call for an interactive question-and-answer session. Thank you.
[Operator Instructions] The first question is from the line of Puneet Gulati from HSBC.
Excellent set of numbers, very pleased to see that. My first question is on the breakup of the minimum guarantee and the revenue share rentals that you've given. Can you shed some more color on what has driven this breakup? Does it have something to do with lower minimum guarantee as well with time versus last year? Or is minimum guarantee versus FY '20 also a significant jump up?
Would you like to -- Puneet, this is Shishir. Would you like to refer to Slide 25. So if you really look at the incremental here. First and foremost, the consumption itself is significantly higher, right? So the contributing -- the rupee value contributed per square foot on account of revenue share has certainly gone up.
If you look at the last column on the extreme right, it will show you what are the areas up for renewal in FY '23, which indicates which of these contracts are towards the end of life or end of tenure, where there is an opportunity to increase minimum guarantee. What this means is that the delta between minimum guarantee and the actual rent received is quite high.
So if you look at Bangalore, which has demonstrated an 18% additional contribution of revenue share towards rental. Not many contracts are towards the end of tenure. So the delta between MG and revenue share is purely on account of consumption and not because MG is too low. Similarly, if you scroll down to Chennai, you will notice that the revenue share has moved up from 3% to 8%. But here, the MG continues to be high in terms of the revenue share thresholds.
Yes. Yes. So maybe I didn't frame the question properly. My intent was to ask how high is MG in 1Q FY '23 over 1Q FY '20 on a portfolio basis or on a mall-by-mall basis?
Q1 FY '20 versus Q1 FY '23, the MG -- I think the MG is not significantly higher. It may be across malls, it may be between maybe 8% to 15% on the higher side?
Okay. And given the rentals also look at one for Bangalore and Pune seems to have been extremely strong. Is that the run rate one can assume or will -- can it be influenced by different sales momentum as well?
So on the rentals achieved, I would say, I would look at it like this, that we -- with the growth in consumption, Puneet, we are estimating the rental including the revenue share, which used to track between 10%, 11% or closer to 12% in some cases, moving up to the 14% -- 13%, 14% range. So stronger consumption is adding to a stronger rental income growth. And if we estimate consumption growth to be -- continue to demonstrate going forward on a stabilized basis, continue to demonstrate, say, 12%, 15% kind of a early to mid-teens growth that will contribute that additional 14% of such growth as well to the rental income.
Right. And is the metro work, which was impacting the Bangalore consumption earlier? Has that been completed? Or is it still going on the performances despite that?
So the civil work for the metro and all the heavy work which was blocking the traffic in front of our mall that has been completed. So a good part of that stretch coming all the way up to our mall has now become freed up from all the road blockages. And that has certainly improved the arrival experience and the time taken by visitors to our mall.
Right. Understood. And any comment on Chennai that still seems to be weaker than the others?
Yes. But it has -- I think it's given us a good indication going forward, how it's going to look with about 8% growth compared to FY '20 Q1. We have done a couple of things. One is, we've started -- we've reactivated all our high-impact events. And that is clearly adding a lot to our consumption over there. And that trend will only continue. And as we continue to promote and actively market, have these high-impact events. We had comedy shows there. We have had music performances at Chennai, which have all brought back the consumption to the mall. Additionally, we've also been looking at revamping that entire brand mix at Chennai specifically Palladium, and that has also yielded some very positive results in the month of July and August for us.
Understood. Two questions for Anuraag and Varun. One is what is the remeasured value now of your Classic Mall as per your books?
So Puneet, that number would be about INR 1,900 crores equity.
And on the debt side, how do you expect your borrowing cost to change -- your borrowing costs linked to repo, MCLR and how frequently does it get reflect?
So it's a mixture of various loans and various benchmark which it is there. Just for reference, I think, because there is a lag between when the RBI increases the rate and when we see an increase in our portfolio. I think as we go along, if you see we have -- RBI has increased the rates by 140 bps or so.
Our overall portfolio as at March end would show an increase of about 110 to 115 bps as the rate changes keeps on coming. The reason for that is we still have about 30% of our portfolio, which we are renegotiating or refinancing with the banks. So that will give us some advantage of about 30 bps over whatever is the rate increase, which gets translated into MCLRs or repo rates, et cetera.
Did I get it right, we should be expecting 110 basis point increase in your borrowing costs as of March '23.
Over March '22 number.
Over March '22 number. Understood.
Versus 140 bps rate increase by the by RBI.
The next question is from the line of Parikshit Kandpal from HDFC Securities. Confirm, if you are speaking, we are not able to hear you. I would request you to use your handset.
Hello. Is it better now?
Yes, please proceed.
So my first question is on the consumption for the month of July, which is like 133% of pre-COVID. Just. If I adjust for the Lucknow malls, it's about 20%. So on a 3-year CAGR, it's still lagging behind just about 6% kind of CAGR. Just wanted to understand if you can give us more granularity on like-to-like basis because still in some malls of trading occupancies yet to reach the lease occupancies on a like-to-like basis, we have to adjust what would be the consumption for the month of July, if we assume that the trading area remains the same on a like-to-like basis?
Sure. Parikshit. Varun this side. So on a like-to-like basis, the growth would be about 21% compared to June 2019. As you correctly highlighted, trading occupancy across the malls right now is at an average rate of about 85%. Now there are several areas that are under fit out, and most pertinently if you were to visit say, Phoenix Palladium, you would see a lot of new areas that opened up in August, including on the second and third floor of East Zone, wherein we launched 8 new F&B venues as well as time zone. Now those are substantial areas that have become rent generating from the month of August itself. So you will see the impact or positive impact on both consumption and rental income flowing through from these new areas during the coming quarter.
Specific to Kurla Mall, Chennai Mall and Pune where the occupancy still continues to remain low versus the leased occupancy. So when do we expect these going back to the lease occupancies? What's the timing frame when we'll see them reaching that leased occupancy?
So I would say on Kurla, there are large areas that are under fit out under the lower ground floor. We have Reliance doing a major fit out as well as a brand from Japan known as Daiso, which is undertaking large fit outs. So from that perspective, I would assume that around Diwali time is when those areas would become operational. What was the second mall that you had asked a question on?
Chennai and Pune.
So Chennai, like Shishir also highlighted in the previous response, there are -- we are undertaking a brand mix change and upgrades to the mall, and we are carrying out some category changes. Now Chennai, vis-à-vis the other market cities became operational later. It became operational in 2013. So the brand mix change that we carried out in Pune and Bangalore in 2018 is now getting carried out in Chennai with a bit of a lag accounting for COVID, et cetera. Yes, in fact, if you refer to Slide 64, you can see the leased occupancy at Chennai being 98% and the trading occupancy currency being about 95%. Despite that, I think if you see the trading density on a per square feet per month basis, we are seeing significant growth for the brands that are currently trading.
My second question is on the upcoming office build-out of construction on the 2 malls in Pune and Bengaluru. So what has been the CapEx, which is already being incurred? What will be the construction progress because we have given a time line of FY '25 of new operational for these office spaces if we can get such a point now?
So on the offices, let me first start with Hebbal Mall of Asia. There, we have already commenced construction and a majority of the slabs have been casted for the office flows. So if you assume, say, about 12 months for interiors and fit-outs, then by this time next year, those assets would be ready.for pre-leasing activities. For Pune and for Whitefield, we are in process. We have obtained the necessary approvals, and we should -- Pune, we have started and Whitefield, we will start soon.
If I may just add. See, these offices are being built on top of the mall podium structure. So for us, really the construction time line to complete the office floors is very limited because it's only building out the slabs and you don't have to go down into the substructure for anything. So we are timing our office delivery basis, what we are anticipating as the demand in those micro markets, both Asia towers in Bangalore at Hebbal and Millennium Towers at Wakad, Pune, we have the ability to really have them ready, as Varun mentioned, for pre-leasing within 12 months.
Okay. And what will be the CapEx on these two, sir?
Cost to complete. For Asia Towers, I think we have roughly around INR 270 crores as the budgeted cost to complete for Asia Towers.
Okay. And Wakad?
And -- sorry, at Asia Towers in Bangalore is about INR 350 crores. And for Wakad, it's about INR 600 crores.
And how much would have been anchored till now in that?
So about INR 35 crores or INR 40 crores would be -- is what we would have incurred at Asia Towers, Bangalore. And we are just about starting work at Wakad. So nothing has been incurred there as yet.
Okay. And just last question, Shishir on -- I think earlier in one of the calls we have highlighted the focus on top 8 cities from business development side. So you had earlier, I think a couple of quarters that we have spoken about Surat we have closed something or any update on Surat recently I think you lost out on the Jaipur bridge. So what's the update on the balance sheet within various markets? So how are you approaching these markets now?
So we continue to be active in these markets that we had highlighted previously as well. Yes, Jaipur, we did step away from that auction at after the price kind of reached a point where it was not making financials. And so -- so we do not want -- we've been very, very prudent about our approach. We are not going we're not overreaching and overestimating the potential of these markets. And I think our final bid was a very fair bid and the land transacted at a higher price and we exited there. But we continue to be active in the markets of Jaipur, Chandigarh, Hyderabad for newer opportunities among several others.
What about the Surat? Any update on Surat closure? I think you have announced it a couple of quarters back that we have closed something there.
We are still waiting for the vendors CP completion, but it looks likely to be achieved very, very shortly.
So this year, Surat may happen. Besides Surat, anything else you are targeting in this year may be another one where you have?
But at this stage, it's too premature for me to give a direction on that.
[Operator Instructions] The next question is from the line of Adhidev Chattopadhyay from ICICI Securities. Mr. Chattopadhyay, there is a lot of disturbance from your line. I am sorry, we cannot hear you properly.
Is it better now?
Yes, please proceed.
Yes. The question was, see in pre-COVID in the 5- to 6-year period. We have seen the rental growth outpacing the consumption growth on a like-for-like basis. Now in FY '23, could you just help us understand, let's say, if the consumption growth is, let's say, within that 20%, 25% range on the consumption side, what is the likely rental growth we see on a like-for-like basis? Like will it be track consumption growth or will it be higher or low? And how does it workout? That is the first question.
Yes, it's a good question. For this current year, we expect it to be higher than -- to track higher than the consumption growth. In the first quarter, I think consumption growth was at about 23%. If we just look at the like-to-like mall at about 23%.
I am sorry to interrupt, sir, there is a disturbance from your line.
Adhidev, would you like to go on mute while I respond?
Yes, yes, yes.
Thank you. So in this first quarter, we've seen about 27% growth in rental, about 23% growth in consumption on a like-to-like basis. We would estimate that this is probably -- you may continue to see this maybe into 1 or 2 quarters of FY '24 before it stabilizes and tracks consumption.
Yes, sure. And how much of the rental increases would also play a part on this? Like how much would be consumption growth likely and how much would come from the rental increases you are planning considering now that we have given the scheduled right now for next 3 years. So how will that play out?
Okay. So I would put it like this that rental increase on account of minimum guarantee increase to bring it in line with -- to track with the revenue share percentage is going to mostly happen more in the next financial year, not FY '23, in FY '24. That's where some sizable part of areas come up in 2, 3 malls and then the following years in some of the other malls.
As revenue growth -- as consumption continues to grow, our revenue share rupee value continues to increase, right? Because if we are tracking an average of about 14% contribution coming in from revenue share, I think that's where we will track. So I don't -- I expect rental growth to be more on account of consumption growth translating into a higher revenue share. The reset of minimum guarantee will probably not reach that threshold for at least 2 years. Because minimum guarantee resets will now have a significant impact only in FY '24 and then FY '25.
Sure. Sure. That is pretty helpful. I'll come back in the queue with more questions.
Thank you.
The next question is from the line of Saurabh Kumar from JPMorgan.
Sir, just 2 questions. One is, if I look at the cash flow, and thanks for the disclosure. So the operating cash flow has now crossed the INR 300 crore number. And if you kind of see it now sponsor CapEx almost fully on its own. So the issue is essentially that you are also sitting on excess liquidity and it seems that your cash flow will only grow from here. So I mean, would you use the excess liquidity to now pay down debt? Or do you have more acquisitions in mind? So I mean how should we think about the use of effect is cash which fits on your balance sheet? So that's the first one.
And the second is calculating this health ratio of your malls, so it seems that from a pre -- from a current quarter perspective, the rent-to-consumption ratio is about 13.5% odd. I don't know if that's the right metric. I mean that's what you get. But effectively, it seems to be at the higher end of the range versus the other malls we see. So how should we think about this going ahead? These are the questions.
Yes, thank you, Adhidev. I'll respond to your second question first, which is the health ratio. When you mentioned that it is on the higher end of the range, that range continues to move depending on the performance of these stores, Saurabh. So while I'm not too sure which other malls you have tracked. But if you look at the performance of stores at our malls with the consumption tracking much higher and actually breaching all historical levels at their stores and their fixed costs largely remaining the same, right?
The ability to share a higher rent in terms of as a proportion to consumption is significantly higher. We have also been evaluating which formats, categories or brands are not being able to demonstrate their capability. And over a period of time, that's what the churn is all about, right?
So when you are seeing some brands moving out and newer brands coming in, the new brands coming in have the ability to share or contribute 14%, 15%, 16%. In fact, India is at the lowest end of the range compared to global standards, where international, you may see malls at averaging at about 20% or 25% rent-to-consumption.
Shishir, the leverage point here is -- I'm sorry for this follow-up, but effectively, so the rent to consumption works to about 13% odd. And then if you add the CAM and everything, then that ratio goes to that maybe 16%, 17%. So for our retailers to make money at these levels of fixed cost, I'm not sure if that's working on -- I mean, how that work out?
I would highly recommend that you speak to a few of our retailers and see how their individual store performance and profitability looks at several of our locations. To our mind, these are the stores that are profitable. And hence, they have higher profit margins because of higher consumption and hence, they have the ability to contribute a little higher towards their occupancy cost.
Moving to your first question. Yes, we are seeing a sizable increase in our operational free cash flows. And when we look at the projects that we have underway and our commitment to fund a good amount of construction by way of our equity contributions and having arrived at that understanding with our partners in the Canada Pension Plan.
We've mapped out our cash flows, and we believe that beyond our obligations there, we still have the ability to acquire maybe one more mixed-use development in the shorter term within the next -- so this goes beyond Surat, which is already under contemplation. We have the ability to at least look at another one in this immediate year without actually having to depend on any additional debt drawdown to serve that purpose. Going forward, like we've mentioned, we will continue to add 1 million square feet every year and that will largely get funded from these 3 operational free cash flows.
The next question is from the line of Kunal Lakhan from CLSA.
Shishir, just may be your comment on like the Ambience Mall, Delhi, which is up for auction now. It's a new market where we don't have a presence. Would we be actively looking at this opportunity? And secondly, a more generic question on that is, how is the opportunity landscape for ready assets in metros as well as Tier 1 cities? And how is the competition for such acquisition?
So our -- with when we look at what has made Phoenix successful in the past and what we are best at is really demonstrating a huge equity upside when we look at a project for -- through its development cycle and operations, right? For us to buy an asset, which is going to show -- demonstrate future yields of anywhere between 7%, 8%, 9% that really doesn't fit in our model.
Specifically, I don't have a comment on the Ambience Mall. It's a good mall about 1 million square feet. I understand the reserve prices are about close to about INR 3,000 crores, INR 2,900 crores or INR 3,000 crores. I'm not too sure that, that fits our returns profile that we expect out of our investment.
Yes, we have in the past also continued to look at other malls across the country. We have -- there are very few that would meet our brand specifications or product specifications. So we prefer to build from ground up or acquire brownfield assets like we did in Indore and at Lucknow.
Sure. My second question was actually a data keeping question. I didn't get the breakup of the collections between retail office, hospitality and residential if you can share?
I'm going to request Anuraag to give you that breakdown.
I covered that in my notes. But just to reiterate, the retail collections are about INR 5,253 million. Commercials are INR 464 million. Residential was INR 536 million. And hotel collections are at around INR 911 million.
So the retail collections, INR 525 million, did it have any residual collections from earlier quarters? Or is this going to be the sustainable and it's higher than the rental income that we clocked. So just to understand?
So it will be about 2% to 3% from the earlier quarter.
2% to 3% higher than the earlier quarters, you said.
No. So I thought your question was how much is pertaining to previous quarters, right?
Yes, how was the -- how much was the residents collection from the previous quarter in this INR 525 crores?
2% to 3%.
The next question is from the line of Pritesh Sheth from Motilal Oswal Financial Services.
So first on, slightly on the macro side. So while the government is trying to control the inflation by bringing down the consumption historically, how that sort of economic strategy has worked for us in terms of consumption in our mall. Do you see any near-term impact on the consumptions because of that?
Pritesh, I would like to start by saying that inflation has been our friend because while we are continuing to see, let's say, interest rates go up and pricing moving up, we are seeing consumers spend also going up because of higher pricing. So that contributes to our revenue share. And that's a positive. And we don't -- we believe that with this -- with the corrective measures that are being taken on the interest rates and all then this inflation will get capped very soon.
So I don't think it's going to result in consumers or customers weakening or reducing their spend on a long-term basis. Yes. And more so -- just to continue more so when we look at the location of all of our malls, we also believe that the impact of inflation may not be high in the urban cities, right, in urban India for our target customers.
Yes. Got it. Got it. Fair enough. And second is on the consumption in MarketCity, Bangalore, which is like 149% of what we were at the pre-COVID and that I think consistent improvements in last, quite a few months and quarters. Firstly, what's the reason for that? And secondly, does that have any repercussions, any positive impact on our upcoming Mall of Asia, which is at probably much better location in Whitefield than this one? So how do you see this increase in consumption in Bangalore?
Sorry, I have not really understood your question. Let me try and answer to -- let me try and answer it in any case. Bangalore as a market has certainly seen a huge revival in terms of people returning back to that city in terms of revival in hiring. We've also seen a huge demand in office space, which indicates that people are back at work.
So I would say that the propensity to spend has returned back to normal as compared to pre-COVID levels. I also believe that the access to our mall has certainly gotten better with the completion of the metro work, which is driving more people into our mall as compared to, let's say, the 6 -- 4, 4 quarters before it when this work had created some impact.
Overall, we also -- when we look at our location in North Bangalore, I would hesitate to say that, that's a far superior location. Yes, it's a different market. And we are capturing the essence of that market by the product offering that we have there.
We have focused more on higher-end premium and luxury brands, and we will have the first of many brands in that city opening their stores at our mall at the premium and luxury space. And that is also reflective in the minimum guarantee rents that have been negotiated for that mall. The -- I would say retailers and us, our confidence is extremely high on the continued high consumption trend that we are seeing in Bangalore for both locations.
Right. So my question was, obviously, you partly answered that. We are already at 160 per square feet range in our existing mall in Bangalore. And for the upcoming mall earlier you had guided that the rentals would be at 150. So are we sort of now looking at much higher rentals from the balance vacancies that we have in the upcoming months in Bangalore?
I can say with a fair level of confidence that most of the transactions at North Bangalore are in line with the current rents that we have in -- at Whitefield Road or slightly higher than that. So yes, we have looked at an upward revision.
The next question is from the line of Manish Agrawal from JM Financial.
So firstly, on the trading occupancies across all malls, we have seen trading occupancies have gone up by combining Phoenix Kurla. So any particularly reason?
If you look at Phoenix MarketCity, Kurla, we've actually created several new spaces for in-line stores over there. If you -- if I may draw your attention to Slide #65, you will see that the leased occupancy is at 93%. So while trading occupancy is at 85%, this gap of 8% is because those stores are under fit out and -- or some of them have been upgraded and they're moving to different locations. So in the quarter, we expect most of these to be operational as well, towards the end of this year.
And trading density would simultaneously go up?
Yes, trading density, the gap that you see between trading density of 85% and leased occupancy of 93%, that gap will reduce during this -- we expect that gap to reduce during this current quarter. If you look at the trading density that has already moved up from -- it's in line with what was seen in first quarter FY '22 with the brand mix also improving and that gap from 86% to 95% reducing and these stores becoming operational, yes, the trading density also in our estimates should certainly move up.
Sure. And on the very next slide, so you have indicated around 30% to 40% of the leasable area will come for renewal across malls over the next 3 years. So any sort of expiry or churn we expect over the next coming years since rentals have gone up significantly across malls?
Correct. So we are actually -- I mean, the next slide clearly shows what is the renewal in FY '23, what is the renewal in FY '24 and '25. What was your specific question?
So any sort of expiries, which might actually happen in this all the area which is coming up for renewal will get renewed for sure?
Are you -- okay, if your question is how many of these brands are going to continue to extend their contract or enter into a new contract versus how many will be exited? So the churn, we will -- I expect the churn to be in the range of about 7% -- 6%, 7%, not more than that. And we expect other brands to be renewed either at the same location or other locations within the mall.
And you have an active pipeline to replace this 6%, 7% churn?
Sorry, what's the question again?
You have an active pipeline to replace this 6%, 7% churn...
Yes. We have most of new brands that we have concluded with our Phoenix MarketCity, Mumbai as well, if your question specifically about Phoenix MarketCity, Mumbai. Yes.
The next question is from the line of Venkat -- I'm so sorry. The next question is from the line of Pulkit Patni from Goldman Sachs.
Sir, given what you managed to do at Palladium by increasing your space so significantly, is it just because this was one of our flagship old malls where we had redundancies which we could do by exploiting the basement, et cetera? Or can we expect similar things to happen in some of our newer malls as well because your expansion of floor area here has been pretty significant?
So we have the ability to expand the retail area across Phoenix MarketCity, Pune as well as Phoenix MarketCity, Mumbai as well as Phoenix MarketCity, Bangalore. These 3 malls, and these are -- currently, the design progress is underway. But we do have this ability, and we intend to replicate this approach across all locations. So in Phoenix MarketCity, Pune, there is the addition of a third floor. At Phoenix MarketCity, Bangalore, we are looking at an additional 2 floors. Phoenix MarketCity, Mumbai, there are 2 floors that we are contemplating adding by moving the Courtyard to another level above. So I think this is a sizable increase across all 3 locations that we will implement in the coming year.
Okay. And can you give a sense of what that will be for each of the malls in terms of square feet?
Phoenix MarketCity, Pune, we should be able to add about 50,000 to 75,000 square feet. At Phoenix MarketCity, Bangalore, we have the ability to add about 300,000 square feet. And similar -- and at Phoenix MarketCity, Mumbai, the ability to add another 50,000 square feet.
The next question is from the line of Venkat from Tata AMC.
Sir, in the recent investor forum, we did speak about putting more capital to use in residential and warehousing, right? Could you kind of delve deeper into this particular plan? And generally, till now, our focus area has been largely retail and commercial, right? So any change in your areas of focus at a company level?
I don't think there is a change in our area of focus. As I think this question I had also covered in the last quarter's call. And I had explained that during COVID, it has been a realization that it would help to diversify our risk across more asset classes. Since during COVID, the hotel business and the retail business cash flows had come down to virtually nil. And the only cash flows that were coming through were from the residential sales and from the office business.
So we are looking at diversifying. And at this stage, it's exploratory. We do not have any intent to allocate any significant amount of capital for warehousing. I had indicated approximately 170 -- sorry, INR 170 crores to INR 200 crores kind of a number towards allocation towards warehousing. And I don't -- this would be more as pilot projects before we take the decision on investing or allocating more funds to that vertical.
Residential, also, we will probably look at an investment of about INR 200 crores to INR 250 crores to explore some -- not to explore, but to exploit some opportunities in some very key markets where the demand continues to be high and the pricing is also extremely, extremely attractive, both from an acquisition point of view and the potential of the market to pay a higher rate per square foot.
Right, right. That's helpful. But just kind of pushing you a little further on this. I mean we already have our plate full. There's a lot of opportunity already there in commercial and retail, right? And we may not be a sizable player in either residential or warehousing. So why put more capital to use on that front?
I would say, for residential, one is to look at it as more of an opportunistic -- as an opportunistic asset class where the investment would be low, but it can add -- give us significant jumps in our cash flows on a periodic basis. And warehousing, I believe that Phoenix is very, very well placed to exploit these opportunities and build a very substantial portfolio once we've completed and seen the success of our pilot projects because of our relationships with the retailers who take up a large space in the warehousing in key Indian cities.
And of course, our ability to deliver these projects where we already have -- in markets where we already have a presence. In terms of bandwidth, I think we do have the ability and the team to deliver both on resi and warehousing. And like I said, we are not looking at taking on too much at this stage. Warehousing is going to be more like a pilot project under an independent team. And our resi team with the way we have progressed with our projects in Bangalore, and where we are today, we -- our resi team has adequate bandwidth to take on at least 2, 3 more projects.
Understood. Understood. And last question on this is any focus cities that you've identified for these segments?
I would say for warehousing, Lucknow, Kolkata, of course, MMR continue to be of interest and NCR continue to be of interest. But Lucknow and Kolkata and MMR are high in terms of our interest levels. NCR, we continue to evaluate. In terms of resi, we have an exceptional team in Bangalore. And so Bangalore continues to be an area of market of interest for us. And we are evaluating other opportunities or other cities which present opportunities.
Okay. Okay. Sure. That's helpful.
To add one more point, in -- on retail and offices, we've spent about INR 4,500 crores of CapEx, and we have another INR 4,500 crores of CapEx lined up for retail and offices, right? So against the CapEx of INR 9,000 crores, which has been committed on retail and offices, we've set aside a very small amount of roughly INR 350 crores to INR 400 crores for resi and warehousing put together.
All right. And what would be the time frame for utilizing this INR 350 crores, INR 400-odd crores?
Sorry, is your question time line for utilizing, I would say over the next 18 months, 18 to 24 months.
Right, right, right. And beyond that, you may want to reassess depending on how your performance is?
Exactly.
[Operator Instructions] The next question is from the line of Amandeep Singh from AMBIT Capital.
My question was on Phoenix Palassio. So when you see consumption for the mall on a month-on-month basis, it remains stagnant in July. But at the same time, when you look at your top 5 other large malls. So consumption on cumulative basis increased 20% month-on-month for the reasons you already mentioned in the opening remarks. So can you help us understand what has been the reason behind this? And do you think...
Please, repeat your question? I didn't get that.
Yes, sure. So my question was on Phoenix Palassio. So when you say your monthly consumption, June versus July, so it has been stagnant in terms of consumption at INR 760 million. But when you see the cumulative consumption for your other top 5 large malls on a month-on-month basis, it has increased 20%. So can you help us understand what has been the reason behind this? And do you think the recent opening of Lulu Mall will impact the consumption for this?
So we are still assessing what impact Lulu Mall may have had on our consumption. I would like to mention here that Phoenix Palassio continues to perform in line with our expectations. So we had estimated that for month-on-month, we will be in that slowly creeping up to that INR 90 crore by the end of this financial year, to hit a monthly run rate of about INR 90 crores. So we are in that trajectory.
Other markets may have seen an increase and jump perhaps because more as I mentioned, there are several reasons why Bangalore has done extremely well with the return of people to offices, return of people who had stepped away during COVID, office demand going up has indicated that. In Mumbai as well, there's a high propensity to spend right now.
I don't -- I would not attribute as yet, I would not attribute any loss to our consumption on account of Lulu Mall because we continue to evaluate the impact of that, if any? And yes, and the other thing is we are now -- we now also have the hypermarket that has opened up. And that will certainly add to the consumption, which so far was not adding to the consumption.
Fair enough. That was helpful. And just extending it -- just an extension to this, will it be possible to help us understand what would be the average daily footfall for this mall on weekly or weekend basis, if possible?
Perhaps you can connect with Advait offline to understand that because we don't actively track footfalls since that's the wrong parameter to measure the mall performance. But we have all the data, and Advait will be able to share that with you separately.
There is a follow-up question from the line of Parikshit Kandpal from HDFC Securities.
Yes. Shishir, just one question. On the area which is coming up for renewal over the next few years. So what kind of mark-to-market in your mind, your estimate is responsible to be achieved here?
Mark-to-market on the rentals? Sorry, could you repeat it.
Yes, yes, yes.
So If I draw your attention back to Slide #65, which has -- which shows what is the revenue share component as compared to the minimum guarantee. I would say that, that indicates the elbowroom of about a 15% to 20% increment on minimum guarantee.
Okay. Got it. Okay, Shishir. Just one last thing on the residential, the balance area, which is there. So when do you expect that to get launched?
If your question is on Towers 8 and 9, we have not yet decided on a launch date for these 2. We are currently focused on completing Towers 7 and sales is focused on the sale of Tower 7 end of Kessaku. We are also waiting for Towers 8 and 9, there's a dependency on the TDR policy clarification to be able to build out as per our development plan. So we're waiting for some clarity on that as well.
So between the 2, the pending sales is about INR 1,200 crores between the 2 branches now?
Sorry, pending CapEx, did you say?
Sorry, sales. Sales value of the receivable inventory, it was approximately about INR 1,200 crores, between the 2 projects now excluding that the Towers 8 and 9?
Excluding Towers 8 and 9, yes, I would say that ready inventory should be -- was at about INR 1,200 crores, but we've recently had some price escalation as well in the month of April this year. So it has moved up slightly.
So on this INR 250 crores, which you had -- INR 200-odd crores in residential, which you're looking to add. So how much of ground development value are you looking to add over the next 18 months from this pipeline. And also, this will be an outright business or are you exploring JDA and other opportunities in the residential business as well?
You are now referring to about INR 250 crores of spend on -- INR 200 crores of spend on residential, right? So typically...
Yes. Yes, which you are likely to spend in next few months.
Typically, I would say that, that would give us access to about -- for a premium site about 1 site, which can give us about 1 million square feet of saleable area.
And presales of about INR 1,000 crores, INR 1,200 crores?
Sorry. Your line is not very clear. Could you repeat that?
One second. I was talking about this 1 million square feet will have how much of sellable value. So is it more like...
So in the markets that we are looking at a base price of being at least INR 12,500 to INR 13,000. So sales value will be about, whatever, INR 1,200 crores to INR 1,300 crores. And let's say an EBITDA margin of about 35% on that.
Right. Are you also exploring the JDA opportunity or only on outside basis? I mean these are...
No. Again, JDA opportunities will be very, very selective only if the site is superlative an unmissable will we consider that.
Last thing on our existing malls or existing assets that are -- is there a potential to add up offers or some resets. Is there a residual exercise which we can be at nice and any cost there?
Sorry, at which location is this?
In terms of existing malls or existing assets, like how we are adding up offers?
It's not -- it doesn't -- yes. So our existing malls, the way they are designed and we've obviously maximized the retail footprint across the site. They are not well suited for any residential development to use any residual FSI. We are utilizing the residual FSI in annuity assets such as offices.
Thank you. Ladies and gentlemen, that was the last question for today. On behalf of The Phoenix Mills Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.