Phoenix Mills Ltd

NSE:PHOENIXLTD

Earnings Call Analysis

Q1 FY '25 Performance and Future Prospects

Phoenix Mills reported a 12% increase in consolidated income from operations, reaching INR 904 crores, and an 8% rise in operating EBITDA to INR 541 crores for Q1 FY '25. Profit after tax also grew by 10% to INR 295 crores. Retail consumption across malls surged by 25%, led by key locations in Mumbai and Lucknow. Despite challenges like elections and a heatwave, occupancy improved to 90%. For FY '25, Phoenix Mills anticipates sustained growth with retail rentals up 31% and plans for further asset enhancements and new mall launches.

Performance Overview

The Phoenix Mills Limited delivered a strong performance in Q1 FY '25 with consolidated income from operations growing by 12% year-on-year to INR 904 crores. The operating EBITDA increased by 8% year-on-year to INR 541 crores, and the profit after tax grew by 10% year-on-year reaching INR 295 crores .

Retail Segment Growth

The retail side showed significant progress with consumption across all malls increasing by 25% to INR 3,215 crores. Excluding new malls like Phoenix Mall of the Millennium and Phoenix Mall of Asia Bangalore, like-for-like consumption grew by 7% . Retail rental income was robust at INR 487 crores, up 31% year-on-year. Consequently, retail EBITDA grew by 31% year-on-year to INR 516 crores .

Challenges and Opportunities

The quarter faced challenges such as elections, F&B restrictions, and a heatwave, impacting footfalls and multiplex performance. Despite these, the company's malls showed resilience, with some categories like jewelry growing by 22% and gourmet and hypermarket segments by 19% .

Commercial and Hospitality Segments

The commercial office business reported a 20% growth in total income and a 33% increase in EBITDA, driven by an improved occupancy rate of 71%. The hospitality segment also performed well, with The St. Regis, Mumbai, maintaining a steady room rate of approximately INR 16,400 and an occupancy rate of 85% .

Residential Segment

In the residential segment, the company achieved gross sales of approximately INR 50 crores with collections totaling INR 60 crores during the quarter. The average selling price stood at approximately INR 26,000 per square foot. The current completed and ready-to-sell inventory stands at approximately 0.44 million square feet .

Financial Health and Future Plans

As of June '24, consolidated debt was at INR 4,398 crores with an average cost of 8.79%. The group's liquidity improved to INR 2,343 crores. The company aims to expand its operational portfolio to 14 million square feet of retail, 7 million square feet of commercial offices, and 1 million square feet in the residential portfolio by 2027 .

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Q1 FY '25 Results Conference Call of The Phoenix Mills Limited. [Operator Instructions] Management of the company is being represented by Mr. Shishir Shrivastava, Managing Director; Mr. Kailash Gupta, Group CFO; and Mr. Varun Parwal, Group President, Strategy, Audit and Head, Corporate Finance. [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.

[Shishir Shrivastava, executive]

Good afternoon, ladies and gentlemen. My colleagues and I take pleasure in welcoming to you all to discuss the operating and financial performance for Q1 FY '25. I will now take you through the key highlights of the results with reference to the relevant slides of the results presentation. Slide 3 gives a brief financial overview. Consolidated income from operations for the quarter grew by 12% year-on-year to INR 904 crores. Operating EBITDA was up 8% year-on-year to INR 541 crores. Operating EBITDA, excluding the residential business for Q1 FY '25 is INR 525 crores, up 21% year-on-year. Profit after tax increased 10% year-on-year to INR 295 crores.

Turning to our retail business from Slide 4 through Slide 13 -- if I may go ahead and check the Slide 5. Consumption across all our malls during the quarter grew by 25% to INR 3,215 crores. Like-to-like consumption, excluding the new malls, which weren't operating last year the same period, which are Phoenix Mall of the Millennium and Phoenix Mall of Asia Bangalore. Excluding these malls, like-for-like consumption grew by 7%. Consumption growth across the portfolio was led by strong double-digit growth in Phoenix MarketCity Kurla, Mumbai and Phoenix Palassio, Lucknow. And an impressive ramp-up of occupancy consumption in the 4 new assets which were launched last year. Year-on-year growth in like-to-like comparative malls was impacted due to multiple factors. During the election, several of our malls were shut for most part of the day on voting days, plus restrictions on [indiscernible] serving of alcoholic beverages, which had an impact of between 4 to 7 days for each mall in each city. Fewer number of movies and lack of blockbuster movie content impacted our multiplex performance and that decreased some footfalls in the mall. The summer was quite difficult in many parts of the country and the heatwave resulted in lesser footfalls, but improvement in 4-wheeler traffic.

Moving on to the category mix in consumption. On a like-to-like basis, we saw a 22% growth in the Jewelry category, which may see further boost post the GST rate cut in the recent budget and 19% growth in Gourmet and Hypermarket. FEC and Multiplex posted a degrowth of 4%, while Fashion and Accessories and the F&B category grew by single digit. Positively, the consumption of electronics has increased in this quarter compared to last year, which is a reversal of trend we have seen in FY '24.

Moving on to occupancy. The weighted average trading occupancy across major malls in the portfolio improved from 88% in March 2024 to 90% in June 2024. PVR at Palladium Ahmedabad will be launching tomorrow bringing the occupancy to 90%. Retail rentals and EBITDA. Our retail rental income for the quarter was at INR 487 crores, up by 31% over Q1 FY '24. This was driven by strong performances from Phoenix MarketCity Mumbai and Phoenix Palassio Lucknow and the ramp-up in the new malls. The strong rental income growth translated into a 31% year-on-year increase in retail EBITDA, leading to a retail EBITDA of INR 516 crores for the quarter. EBITDA margin for operational assets remained healthy and grew by 7%. New malls contributed approximately INR 85 crores in rental income and INR 86 crores in EBITDA. EBITDA margin is slightly lower at 100% in new malls during the initial period of occupancy ramp-up.

Our outlook going forward, we continue to focus on retail rental and EBITDA growth and like-to-like consumption growth for the quarter was 7%, the retail EBITDA growth was 100%. Especially in our older assets like Phoenix MarketCity malls located in Bangalore and Pune, the focus is currently on premiumization through enhanced retail mix and category improvements, creating a compelling entertainment and F&B destination, keeping the brand mix fresh by introducing new brands across different formats, focus on creating specialized clusters to enhance shopping experiences, developing high recall and creating high engagement through live performances, unique curated events, larger-than-life decor and art solutions. Asset enhancements through [indiscernible] change in layout and working to minimize -- maximize customer convenience by redesigning for the traffic circulation is also high on our priorities. In fact, we have already carried out the first phase of revamp at Phoenix MarketCity Mumbai to a significant extend with the center reporting a 12% growth [indiscernible] and 15% increase in EBITDA. And we are confident that this growth will sustain in the coming quarters with more asset enhancements, retail category, cluster creation and high recall marketing events.

Moving on to the commercial office business covered from Slides 14 to 17. Our operational portfolio in Mumbai and Pune delivered a growth of 20% total income and 33% in EBITDA -- and improved occupancy of more than 70%. We leased approximately 1.5 less square feet per quarter. Occupancy in our operational portfolio climbed to 71% by June 2024 and from 70% as of March 2024, while maintaining a healthy gross rental level at approximately INR 114 per square foot. We look forward to the launch of new-age commercial office spaces in Bangalore, Pune and Chennai, which have generated significant interest. As the demand for space is increasing, we are signing to strike a balance between the occupancy rates and the rental rates with a long-term view, but we are certainly seeing a surge in the demand for grade-A commercial office spaces which are ramped that we have in our portfolio.

Moving on to the hospitality portfolio covered from Slides 18 through 22. The St. Regis, Mumbai, our marquee asset, maintained a steady room rate of approximately INR 16,400 with the occupancy increasing to 85% in Q1 FY '25. The improved occupancy led to a 3% increase in room revenue compared to the previous year. F&B and Banqueting revenue declined by 4% due to factors such as auspicious days, venues shifting to Q2, the elections and consequently, the dry days and impacted corporate and leisure travel into the summer. While operating income is down 2% for Q1, EBITDA remained flat on a year-on-year basis. Despite these headwinds, The St. Regis has shown resilience with a 36% revenue growth in July '24 versus July '23.

Courtyard by Marriott Agra faced similar challenges during the quarter. Occupancy dropped to 63% and the Average Room Rate fell to INR 4,166. This asset generated INR 9 crores in total income with the INR 1 crore EBITDA resulting in a 15% margin. As mentioned earlier, the heatwave, elections and F&B restrictions impacted the hotel's performance.

Slides 22, 23 to 24 covers residential. During the quarter, gross sales reached approximately INR 50 crores with collections totaling INR 60 crores. We achieved an average selling price of approximately INR 26,000 per square foot. Our current completed and ready-to-sell inventory stands at approximately 0.44 million square feet.

This brings me to the end of our operational and financial updates across verticals. I will now request our CFO, Mr. Kailash Gupta to take you through the overall financial results. Thank you.

[Kailash Gupta, executive]

Thank you, Shishir. Good afternoon, everyone. I will now take you through the financial updates covered from Slide 25 to 34. So between Slide 26 to 28, starting off with the P&L updates. On a stand-alone basis, PML [indiscernible] business of Palladium Mumbai and office which is called the Phoenix House. The income from operation for Q1 FY '25 is INR 118 crores, which is flattish for the quarter as compared to quarter-on-quarter. And EBITDA saw a degrowth of 6%. On consolidated basis, income from operations for Q1 FY '25 is higher by almost 12% compared to Q1 FY '24. Our operating EBITDA for the Q1 FY '25, we have reported INR 531 crores with an increase of 8% Y-o-Y. Profit after tax after adjustment of minority interest and exceptional items is at INR 295 crores for FY -- Q1 FY '25, grew by over 10%.

Coming to Slide 28, which is adjusted for the -- revenue across annuity portfolio was INR 872 crores, a growth of 24% Y-o-Y. EBITDA excluding the residential business grew by 24% Y-o-Y, reaching to INR 525 crores in Q1 FY '25. Retail side, EBITDA delivered a strong performance with a 31% Y-on-Y growth on an asset level. Key drivers including the performance of PMC Mumbai and Phoenix Palladium along with the ramp-up of our New Malls portfolio. On the commercial portfolio, EBITDA grew by approximately 33% Y-on-Y on an asset level driven by improved occupancy, especially at AGH and Fountainhead Towers.

On the [indiscernible] side, Q1 FY '25 was a challenging quarter -- due to a combination of factors, including elections, F&B restrictions and heatwave. Despite these headwinds, [indiscernible] has shown resilience with a 36% revenue growth in July '24 vis-a-vis July '23. On the resi portfolio, last year, we sold a significant amount of resi inventory of our resi assets in Bangalore. We posted revenue and profits. Revenue was posted Q2 BOC, which we have [indiscernible] given that we now have limited resi inventory, around 4 lakhs square feet [indiscernible] Bangalore. We expect annual sales of inventory to be around INR 350 crores to INR 400 crores. We continue to see strong demand for the completed inventory despite the taking price increase, INR 26,000 per square foot. The sales momentum should pick up in FY '26 onwards with the launch of new inventory in Kolkata [indiscernible] Bangalore.

Turning to Slide 29 to 32. Now on our debt and liquidity updates covered in Slide 29 to 32. Consolidated debt as on 30th June is INR 4,398 crores with an average cost of around 8.79%. On a consolidated cash flow level, we generated cash flow from operations of INR 514 crores net of taxes. Just for perspective, after the -- interest paid on the debt side, our operating free cash flow net of taxes and interest is INR 429 crores for Q1 FY '25, which is lower by 5% Y-o-Y. And operating cash flow from our annuity portfolio is INR 409 crores, up by 20% over the last year for the same quarter. Group level liquidity improved to INR 2,343 crores as on June '24, whereas gross debt has a marginal increase of INR 31 crores. Our group level net debt position stood at INR 2,054 crores and majority of our CapEx has been funded through the internal accruals and liquidity during this quarter.

On Slide 33, we have a clear roadmap of where we tend to be by 2027. We aim to have an operational portfolio of 14 million square feet of retail, 7 million square feet of commercial offices, close to 1,000 keys in our facilities, and adding 1 million square feet in our resi portfolio. We are now busy charting growth beyond 2027, and added our development mix to land acquisition in Thane and Bangalore. We continue to evaluate and work on opportunities to add to our [indiscernible].

Last but not the least, the Board has recommended [indiscernible] subject to shareholder approval.

This brings me to the end of our financial component updates. Now we are open for a Q&A session.

[Operator]

[Operator Instructions] The first question is from the line of Puneet from HSBC.

[Puneet Gulati, analyst]

Yes. And congrats on the nice ramp-up of your new malls. So my first question is with respect to the new mall Bangalore itself. It is already generating whether it's third quarter INR 48 crores of rentals versus your existing Bangalore mall which is generating INR 50 crores, so -- on a quarterly basis. Does it look like we've already hit the peak here because it's still 70% occupied. And how much more do you think it can go in terms of rentals from here?

[Varun Parwal, executive]

Puneet, thank you for the questions. Varun this side. Your observation on Mall of Asia is very correct. I think we have seen a fantastic example in this asset, and that is also reflected quarterly consumption that we have seen. And the asset stood at 72% occupancy so over the next 6 to 9 months,, we should see going to about 90%, and that should really help us establish a new benchmark as far as consumption at our new malls are concerned. The rent should also continue to going in line with -- and maybe not for FY '25, but if I were to say for FY '26, we should see this asset nearing the rentals as we currently see rentals at Phoenix MarketCity Bangalore.

I would also draw reference back to some comments from Shishir [indiscernible] Shishir spoke about the retail category upgrade, premiumization and asset enhancements that we are also carrying out at some of our existing properties. We've already seen the leverage of this from in Phoenix MarketCity Kurla. And we -- a lot of these changes are currently underway in Phoenix MarketCity Bangalore and Pune as well. So Phoenix MarketCity Bangalore should also step up from the current rent that we are -- the current rental run rate that we're seeing right now.

[Puneet Gulati, analyst]

Okay. So do you think that benefit will come in this year itself? Or is it likely to be FY '26?

[Shishir Shrivastava, executive]

Shishir, here. So yes, these are some interesting ideas we will take time to execute in an operating model. So we expect them to start coming in FY '26 -- towards the end of '26 and early '27.

[Puneet Gulati, analyst]

Understood. And in the similar context, Citadel, which is still quite young, hasn't grown in this quarter. Anything to read there?

[Shishir Shrivastava, executive]

Can you repeat your question, Puneet?

[Puneet Gulati, analyst]

Citadel mall in Indore, which is still quite young, but that hasn't grown in this quarter? I would have thought it would have had a similar trajectory.

[Varun Parwal, executive]

So, I think Puneet, [indiscernible] quite nicely as far as occupancy is concerned and more [indiscernible] also, I would say, doing well compared to existing malls -- compared to the existing assets, Phoenix Citadel is [indiscernible] quite good [indiscernible] purpose. That asset is also constructed at a low cost, and that is also [indiscernible] that we see in these assets that we are generating in there. In fact, if you look at the financial metric in terms of [indiscernible] cost that we have invested in this asset, we are ranging within our benchmark guidance of 12% to 15% [indiscernible] in the guidance. So from that perspective, it won't be accurate to benchmark [indiscernible].

[Puneet Gulati, analyst]

And rental also, it's flat Y-on-Y, which is why the question is.

[Varun Parwal, executive]

You've specially questioned of consumption growth compared to previous year. There are some infrastructure improvements have been undertaken by the government in that area, which has impacted the traffic flow, et cetera. And this quarter also [indiscernible] has in way of marketing [indiscernible] you should see that evolving in the coming quarters. Shishir, any comments from you side?

[Shishir Shrivastava, executive]

Yes, it's actually the bridge that has been constructed on the highway right in front of the mall which made access a little difficult, really impacted our footfalls. And I think, in another 6 months or the 8 months of work where it should get completed. In the meanwhile, of course, we continue to look at various initiatives from our end in terms of getting more -- a better and different brand mix, more marketing events to drive the current profile of the people. So that's an ongoing business for us, which we continue to do. We remain confident about Phoenix Citadel now becoming the destination for [indiscernible]. And it's -- I think it's just a blip for a short while.

[Puneet Gulati, analyst]

Understood. And on the big picture for your growth, is there anything that you need to do to bring back the consumption growth back in second quarter? Or you think second quarter could still at the margin be similar to first quarter in terms of mature malls?

[Shishir Shrivastava, executive]

Puneet, for some reason, we're not being able to hear you very clearly. May I request you to repeat that again?

[Puneet Gulati, analyst]

Yes, sure. Yes. My question is, should -- the consumption growth in 1Q was a little weak for the mature malls. Is there anything which is changing which should drive better growth in Q2?

[Shishir Shrivastava, executive]

So you are saying for the stabilized malls?

[Puneet Gulati, analyst]

Yes for the stabilized malls. Yes.

[Shishir Shrivastava, executive]

Okay. Again, I would say, Puneet, there is a lot -- there are a lot of activities and initiatives that we continue to undertake on an ongoing basis. And clearly, this takes some time to have an impact. I don't think there's a structural consumption issue, a reduction in demand as such that we are facing. These are isolated situations in this quarter where we may have seen this impact, and mostly in April and May quarter. So we are seeing the ramp-up in May and June -- April was quite impacted. May and June, we saw ramp-up and move forward.

[Puneet Gulati, analyst]

Understood. And lastly, your residential business, One Bangalore West has now very little inventory. Is there a plan to launch the next phase there?

[Shishir Shrivastava, executive]

Not as of right now. we're still waiting to understand the development potential and the TDR, et cetera, because the last phase will be dependent on that.

[Operator]

[Operator Instructions] The next question is from the line of Parikshit Kandpal from HDFC Securities.

[Parikshit Kandpal, analyst]

Shishir, my question is more on the mature malls. So the trend on decline in consumption. So it has been there for now almost 2, 3 quarters. I know this quarter, there could be some exigency, which you highlighted. So large part of growth that we understand, if we normalize on our consumption is coming from trading occupancy ramp-up and same-store sales growth doesn't seem to be happening, value below inflation. So do you think -- what could be -- I mean you said that there are no structural reasons, but what would justify this? I mean, because this is not a trend which is there in this quarter, that's been there for the last 2 quarters actually?

[Shishir Shrivastava, executive]

Thank you for your question, Parikshit. I think the answer is for each occasion is beyond the question around consumption growth. We explained Phoenix Palladium Mumbai is currently seeing a massive disruption. We are adding 250,000 square feet of internal space in the next few months, which is [indiscernible]. As a consequence of that parking circulation, all of that is causing disruption. This will hopefully settle down during this quarter or next quarter. So I think that has certainly impacted our consumption, but that was something that we will -- this is -- we had anticipated and expected a disruption because the gains after this product enhancement are far superior. So -- in fact, if you look at it, Q1 FY '25, we may have seen a 4% growth in rental at Phoenix Palladium. And while consumption may be down by 2% compared to last year. But this is a catch-up for the previous growth cycle of consumption where rental is [indiscernible] doesn't mean that the occupancy cost is going up significantly or anything like that. We have seen a 3% rental growth in Bangalore versus 4%...

[Operator]

Sorry to interrupt, sir. The management line is being a little muffled. Can you please come a little closer to the device?

[Shishir Shrivastava, executive]

Yes. In Phoenix MarketCity Bangalore, we've seen a 3% growth despite a 4% decline in consumption in this quarter, right? I think this is just where we are going to start seeing the ramp up again in the coming quarters. We all know what the disruption was. And in some locations like Indore, Mumbai where infrastructure work or expansion going on, there is some disruption.

[Parikshit Kandpal, analyst]

Shishir, your voice was actually a little feeble. So it has been throughout the call, so difficult to catch up. So but I understood you said [indiscernible] is going on. I think -- do you have anything else to add or shall I move to the next question?

[Shishir Shrivastava, executive]

I'll just cite 2 more examples. Phoenix MarketCity Mumbai, we've seen a 12% conversion growth. And this is a result of all the activities and initiatives we have undertaken in the last several months. plus the opening of the access from BKC. Phoenix Palassio Lucknow has seen a 14% growth in consumption and 12% growth in EBIT. I think [indiscernible] consumption at some point in time, and it's not related to demand.

[Parikshit Kandpal, analyst]

We remain confident on consumption -- so just saying that are more infrastructure or internal issues, which is causing this consumption. So there's no such pattern or change in consumption to some other sectors besides the malls?

[Shishir Shrivastava, executive]

Yes. We don't see it that way.

[Parikshit Kandpal, analyst]

Okay. So my second question is on your plans to add new malls. I think we [indiscernible]. So anything else in the pipeline? You've been highlighting locations and really evaluating deals. And if you concrete and something in the near term, which may get finalized in this financial year?

[Shishir Shrivastava, executive]

Yes. I think in this financial year, we'll be able to some more. We are on the verge of concluding 1 transaction in South India, and that will be another sizable destination mall for [indiscernible] city consumption center and a district consumption center.

[Parikshit Kandpal, analyst]

This one is not in Karnataka, right? I mean, South [indiscernible]. So I think, in Hyderabad, you're looking something. So is it?

[Shishir Shrivastava, executive]

We'll be happy to announce it as soon as we can.

[Parikshit Kandpal, analyst]

Okay, sure. And this will be like a large layout? And what kind of like mixed-use development you're looking at owning all our office or [indiscernible] all the potential or like...

[Shishir Shrivastava, executive]

For the moment it is going to be -- the focus is going to be phase 1 mall for a large mall.

[Parikshit Kandpal, analyst]

Okay, large mall. So large means, are you're looking at -- million plus Okay. And just my last question is on residential business. So you have -- so what are the launch pipelines or anything you have firmed up on Thane? What's the update on Kolkata? So I think you mentioned about Bangalore. So what about this update on Kolkata? And any plans on what could be the mix on the Thane? And what stage of planning or design is that? And what kind of mix we'll see there?

[Shishir Shrivastava, executive]

We are not yet ready to announce the development is because we are going through [indiscernible] asset classes. So we're ready to announce [indiscernible]. In Kolkata, yes, we're gearing up for launch, I think [indiscernible].

[Parikshit Kandpal, analyst]

But as a business on resi, so what could be your -- I mean what kind of pieces number you have in like 3 years where you've given the plan for next 2, 3 years? So how do you think resi business will contribute -- and how you grow given that beyond this, you don't have any major pipeline on the residential side?

[Shishir Shrivastava, executive]

Parikshit, we've always said that for us, resi is opportunistic, focusing on [indiscernible] fantastic opportunity in Calcutta. We saw a mature market with very good benchmark pricing. And we have the [indiscernible] to build a couple of million every year. So we are not -- even now, we're not going on [indiscernible]. We will continue to [indiscernible] in the right market.

[Operator]

[Operator Instructions] The next question is from the line of Parvez Qazi from Nuvama Group.

[Parvez Qazi, analyst]

So a couple of questions. First, I'm sorry, if you had answered this already, but I just want to check, any update on the new Bangalore land that we had purchased last quarter? Have we finalized our plans there? Or what's your thought process regarding that?

[Shishir Shrivastava, executive]

Yes. That Bangalore land, it's right adjacent and shares the boundary with our existing Phoenix MarketCity Bangalore. We are looking at different options over there. We are also looking at the possibility of whether one can [indiscernible] and expand [indiscernible]. So it's an ongoing activity at our end, we are working at it. We don't have any specific mix to announce as yet.

[Parvez Qazi, analyst]

Sure. And regarding the resi project in Bangalore, any chance of a new tower launch, let's say, maybe in FY '26?

[Shishir Shrivastava, executive]

I answered that a short while ago. We're waiting for clarity on the TDR policy, pricing, et cetera, which will be onetime [indiscernible]..

[Parvez Qazi, analyst]

Sure. And lastly, just a book keep question. What would be the pending CapEx on our under-construction assets?

[Varun Parwal, executive]

Parvez, is that question on per square foot CapEx you're asking? Or for overall pending CapEx?

[Parvez Qazi, analyst]

Overall would be fine.

[Varun Parwal, executive]

Okay. So I think overall, if you look at October to June 2024, I mean during the quarter [indiscernible] we spent about INR 470 crores on pure construction in CapEx for the assets. And balance amount that we have to spend is at about INR 4,500 crores keeping the residential projects in [indiscernible] because that project [indiscernible]. We are also keeping Thane out of this. So these are all, I would say, you need to correlate the numbers and should refer to our slide on what asset mix [indiscernible] by end of 2027, and the balance CapEx of INR 4,500 crores corresponds to [indiscernible]. As we announced Thane or as we announced expansion plans in Bangalore, we will update and come back with revised numbers.

[Operator]

The next question is from the line of Pritesh Sheth from Motilal Oswal.

[Pritesh Sheth, analyst]

First question is on the category-wise consumption mix that you have given in Slide 10. So certain categories like jewelry, gourmet and hypermarket doing well. It's because of the mix change that you would have done in your existing malls or something to do with the category itself doing well? And your second question to that is -- will there always be this differential of performance between the categories like certain categories not doing well or doing below average kind of growth and certain categories doing well? Or you see that there is certain structural issues that are there with certain categories like electronics. Obviously, multiplexes, we know what kind of issues that we are going through right now. But can these categories which have underperformed, now start to ramp up in terms of like-for-like consumption growth?

[Varun Parwal, executive]

Let me take [indiscernible]. So as for gourmet and hypermarket -- in FY '23, you're seeing this category perform significantly and we see if we were getting, say, INR 100 in consumption, consumption in FY '23 has come down to a very low phase of, say, only INR 30. From then to now, we are not seeing new players enter this category, and we have seen some performance improving. But it is still at a low rate [indiscernible] gourmet and hypermarket. And as we have [indiscernible] offices coming in, we need to optimize the spaces given to some categories like gourmet and hypermarket. So there is a rationalization of the [indiscernible] but they continue to remain an important part of the product mix that we are [indiscernible]. And after the rightsizing and [indiscernible], I think the category is showing a sustained continued improvement quarter-after-quarter. On jewelry, I think in the past we have spoken about creating [indiscernible] from the gold jewelry, the diamond jewelry segment, the daily-wear segment and then the Indian [indiscernible]. I think [indiscernible] I would say [indiscernible] it's also taking a good amount of shape in existing malls including in Phoenix MarketCity Mumbai. And that's why on a like-to-like basis, we continue to see a good strong growth quarter after quarter.

Structurally, on the latter question on the underlying trend, structurally, Indian [indiscernible] remains very promising and very exciting, especially in the cities that we are in or the cities that we're targeting. And one way to look at it is to look at all the number of foreign brands that are into India, all the expansion plans of the domestic brands as such. There is so much new [indiscernible] coming to the market and demand for space. We also add regional consumption centers. We also need to take some time to [indiscernible] and redesign [indiscernible] consumption. Structurally, we continue to be very strong and very positive on the consumption. So I hope that answer your question.

[Pritesh Sheth, analyst]

Yes, yes, it does. And second, on the office side. So if you can provide an update on leasing status and all of -- Asia Towers and even for June, what's the status in terms of completion? And have you started any leasing on that front?

[Varun Parwal, executive]

Asia Towers is completed, we're just awaiting for the occupation certificate. And we have done about 4 transactions, which are right now [indiscernible] stage and we have [indiscernible] signing those agreements [indiscernible] as well on a quarterly basis from our side.

For Pune, on top of [indiscernible], we have 3 office towers, which will aggregate to [indiscernible] of about 1.2 million square feet to 1.4 million square feet. [indiscernible] completed. We have completed the structure [indiscernible] and they're right now [indiscernible] of that structure. [indiscernible] structure is getting completed [indiscernible] within the next 9 to 12 months [indiscernible] will be completed [indiscernible] occupation certificate, we'll start [indiscernible] providing an update in our quarterly [indiscernible].

[Pritesh Sheth, analyst]

Sure, sir. And just one last on Surat. So what kind of rental assumptions that we built in when we underwrite it? And -- yes, I mean, if you can help on that. Surat mall.

[Varun Parwal, executive]

Surat, we have just completed the excavation in Surat. So construction activities [indiscernible]. I would say that we are still a bit early in the sense that we're still 3 years away from completion -- the guidance, we can consider of INR 140 or thereabouts [indiscernible].

[Operator]

The next question is from the line of Puneet from HSBC.

[Puneet Gulati, analyst]

Yes. If you can also comment a bit on how soon should we see the leasing of the big Pune and Bangalore office to start generating rent?

[Shishir Shrivastava, executive]

Puneet, can you repeat your question?

[Puneet Gulati, analyst]

Yes. How soon can you transactions that you're undertaking in terms of office leasing in Pune and Bangalore can conclude? And when should we start rentals coming from those offices?

[Shishir Shrivastava, executive]

So Puneet, we are expecting our OC in Bangalore. It can be 45 days, it can be 60 days, that's not in our control. But I would think that rental generation one can expect that from January, we should start seeing rental income in Phoenix [indiscernible] Bangalore. We've done some core transactions. And we are now working actively on marketing that asset. So we'll start seeing some income from January next year. But I would think that FY '26 is the year -- by end of FY '26 is the year, when one can estimate it to be close to 80%, 85% or 90% occupancy.

[Puneet Gulati, analyst]

Okay. And for the Pune?

[Shishir Shrivastava, executive]

For this year, but we will not start generating rent. [indiscernible] we'll start generating rent in the next financial year.

[Puneet Gulati, analyst]

Next -- so Bangalore would be earlier than Pune?

[Shishir Shrivastava, executive]

Yes, yes, because Bangalore is ready. The entire 800,000-odd square feet tower is completed, both the buildings, I think, are completed.

[Puneet Gulati, analyst]

Okay. Okay. And any reason why they have been pushed out a bit because the mall got completed early?

[Shishir Shrivastava, executive]

But we will continue with the construction and installation of all equipment machinery and all for the office. That's the way we always build that composite structures. We launched the mall, get part occupation for the mall. We continue to build on top...

[Operator]

[Operator Instructions] The next question is from the line of Pulkit Patni from Goldman Sachs.

[Pulkit Patni, analyst]

Just 1 question you spoke about Palladium and the impact on consumption because of all the renovation work you're seeing. Can you highlight what is the exact square feet directly and indirectly that has been impacted because of this. Because when I look at your mall GLA in your presentation, there you are assuming that it's basically the same GLA that's available. So what exactly do you think would be the impact in terms of square feet, both directly and indirectly because of parking, et cetera, not being available?

[Shishir Shrivastava, executive]

Pulkit, we've not shut down any of our operational GLA for this. It's only the parking infrastructure and the lands which are also being for construction that we are seeing some disruption in traffic movement, and that is discouraging, I think [indiscernible] impacting the footfall, impacting the consumption.

[Pulkit Patni, analyst]

Sure. No, I'm also asking about the Lifestyle renewal, which is under renovation, et cetera. So what exactly is that area?

[Shishir Shrivastava, executive]

So that -- where the Lifestyle structure was, that area was roughly around, I think, 50,000 square feet of GLA. But we shut that more than a year ago. So it was not operational in the last -- it was operational only for April in financial year FY '23 -- FY '24, sorry.

[Pulkit Patni, analyst]

Yes. And there is nothing incremental other than that, that we are talking?

[Shishir Shrivastava, executive]

Nothing. Nothing incremental other than that. And of course, we are going to reconstruct a part of the structure and add back some of the GLA. But we are making this a very, very prominent and exciting arrival experience for the massive construction that we're doing with the project [indiscernible]..

[Operator]

Ladies and gentlemen, that was the last question for today's call. On behalf of the management of Phoenix Mills Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.