Phoenix Mills Ltd Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Puneet Gulati - HSBC - Analyst : Yeah. Thank you so much and congratulations on the nice ramp-up for your new malls. My first question is if you can give some color on what you're seeing in the first 25 days of this month. How is the start of the festive season and this one in terms of consumption levels?

Question: Puneet Gulati - HSBC - Analyst : Understood. That's helpful. Just a small observation here. In your other category for last quarter, there's a sharp 21% decline. I know it's a small part of your overall business, but what all does it capture?

Question: Puneet Gulati - HSBC - Analyst : Yeah. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 26, 2024 / 5:30AM, PHOE.NS - Q2 2025 Phoenix Mills Ltd Earnings Call

Question: Puneet Gulati - HSBC - Analyst : Okay. Noted. And secondly, if you can comment upon -- you've done three acquisitions of late and some progress on Thane side as well. So Coimbatore, Mohali, Thane, if you can give some sense of what are the rentals on which you've underwritten the retail portfolio? And what is the total area you're looking to build there?

Question: Puneet Gulati - HSBC - Analyst : Understood. Lastly, if you can comment on the progress on your office leasing side.

Question: Puneet Gulati - HSBC - Analyst : Okay. And Pune side?

Question: Puneet Gulati - HSBC - Analyst : That's really helpful. Thank you so much and all the best. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 26, 2024 / 5:30AM, PHOE.NS - Q2 2025 Phoenix Mills Ltd Earnings Call

Question: Pravin Chaudhary - Morgan Stanley - Analyst : Congratulations on, again, good results. I'm looking at just one number, and I'm trying to decode as much as possible. So please indulge if you can. So I'm looking at the PATMI number, which is net profit after minority interest. And when I look at last quarter, it was down 3% year over year. This quarter is down 14% year over year. Again, obviously, there is a residential angle to it. So two questions there. One is, how should we think about the residential business margin for you? Is it a 5% margin business or 15%? And then the second thing is that you have given us, excluding residential EBITDA growth, I think, probably for the first time, would you ensure that you will continue to give? Or can you give retroactively before so that, that's a real way to understand the growth? And the reason to -- there is a disconnect between these two because if you remove the residential part of the business, it's nicely growing the IP business, both in EBITDA and revenue terms. But as I said, in PATMI, even if I remove the residential part with some assumption of margin, it still shows year over year decline. So can you just help us reconcile that?

Question: Pravin Chaudhary - Morgan Stanley - Analyst : Sure. Both are helpful information. I was not talking about EBITDA margin. I was thinking of net margin because one of the main questions I have is your EBITDA growth is fine like-for-like or excluding residential, that's very strong. We are talking about PATMI growth, which is where, because of minority interest, maybe minority interest is growing very fast, those malls, which are JV projects, are doing very well. That's why there is a disconnect between the speed at which you're growing on the top line and EBITDA is not showing up in my net profit line. And I'm trying to reconcile it, and that's why I'm using that.

Question: Pravin Chaudhary - Morgan Stanley - Analyst : Makes sense. I mean, I guess the strategy is unquestionably correct. We also see that recent land acquisitions will ensure the visibility till 2030 in terms of newer malls and newer offices coming through. Some investors do ask, is there a gap between now and 2027? And probably that you were trying to answer that question by saying some of the FSI, you will exploit it. But is there something you want to talk about between now and 2027 when either Surat or Kolkata comes through and after that, it looks very smooth that we can see some slowdown, meaning that there is -- the gap between the reported growth and the like-for-like growth will narrow, means they will be similar, which will reduce the overall growth for the company? And we understand the office coming through and we understand the Palladium extensions coming through, but still it won't be same as what we have seen in the last 12 months where you have 4 new malls coming in. Is there anything to fill up that gap?

Question: Pravin Chaudhary - Morgan Stanley - Analyst : That is very reassuring. Thank you so much. And again, Happy Diwali in advance to everyone in the management team.

Question: Parikshit Kandpal - HDFC Securities - Analyst : Shishir, congratulations on a decent quarter. So Shishir, my first question is on consumption. So we have seen a decline of 4% in Palladium, 2% in Bangalore. So Pune also 5%, and 3% Palladium, Chennai. So I just wanted to understand if you can help us with some data points over the last few months. So how has been the revenue share and the minimum guarantee tracking? So is there a divergence building between the two now because of the slowdown in sales of the retailer? And will that in any way impact our -- I mean, will they come back to us and negotiate again for a lower rate if they are not able to do well in their portfolio?

Question: Parikshit Kandpal - HDFC Securities - Analyst : Okay. But you are seeing some divergence between the two. So revenue share is tracking down and MG is tracking higher over this period? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 26, 2024 / 5:30AM, PHOE.NS - Q2 2025 Phoenix Mills Ltd Earnings Call

Question: Parikshit Kandpal - HDFC Securities - Analyst : Okay. Sir, second question is on the multiplexes, which is about 14% of the trading mix and F&B 11%. So in 1H, we have seen both multiplex is tracking down by almost 11% in consumption and F&B has been muted 0% to 2%. So they take up almost 25% of the area, but they are not growing and both are interrelated. Though they contribute very low, I mean, mall multiplex is about 4% to the consumption, but still occupying a lot of space. And we have not been getting good content, I mean, a blockbuster content of late for some time now. So -- and I think you did mention that you are looking at adding more area under this umbrella. So given that, so how do you see growth coming in when large part of the area will not contribute towards rental growth or consumption growth?

Question: Parikshit Kandpal - HDFC Securities - Analyst : Okay. Just on that, the last question on this Thane thing. So now we have two large malls in the vicinity of about 2-kilometer radius. And I understand one of the peers who has bought a land nearby is looking to sell in the market to sell the land where he was planning to build a multiplex. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 26, 2024 / 5:30AM, PHOE.NS - Q2 2025 Phoenix Mills Ltd Earnings Call So what gives us confidence that in a market where already two large assets are there, one peer is looking to exit? So what gives us confidence that, again, we can repeat a Phoenix MarketCity kind of a model in this macro market?

Question: Parikshit Kandpal - HDFC Securities - Analyst : So what will be the rental we are kind of starting rentals?

Question: Parvez Qazi - Nuvama Group - Analyst : Yeah. Hi, good morning. And thanks for taking my question. So my first question is regarding the Thane land parcel. When do we see the completion timeline for the mall, which we intend to develop in the first phase? Second is with regards to the Kolkata residential project. What could be a potential launch timeline there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 26, 2024 / 5:30AM, PHOE.NS - Q2 2025 Phoenix Mills Ltd Earnings Call And third, at a slightly broader overall level, I mean, slowdown in urban consumption has been talk for now last couple of quarters. We have, in fact, done quite well. So what additionally can we do in terms of either category mix change or other things which we can try to kind of tackle this in future? Thank you.

Question: Parvez Qazi - Nuvama Group - Analyst : So the completion timeline for the Thane mall.

Question: Parvez Qazi - Nuvama Group - Analyst : Sure. For the Kolkata residential project?

Question: Parvez Qazi - Nuvama Group - Analyst : Sure. And regarding the overall urban consumption things, what can be done?

Question: Parvez Qazi - Nuvama Group - Analyst : Sure. Thanks.

Question: Kunal Lakhan - CLSA - Analyst : Yes, sure. So just on the consumption side, so if you just consider like the malls, which have been stable, right, in terms of the occupancy above 90%, so if you exclude, say, Ahmedabad, which saw an uptick in the occupancy as well as trading density, the overall consumption, rather same-store consumption was like, say, less than 3% up, right? How does this -- like how should one look at this number like going ahead, right? I remember in the past, you've spoken about like your mature malls should clock somewhere in the range of like double-digit consumption growth on a steady-state basis. How do you look at this number now in context of like the slowdown that we are seeing overall in consumption across India? I understand your -- consumption at your malls is doing better, but overall slowdown is less. So how do you see this number for steady-state malls going ahead?

Question: Kunal Lakhan - CLSA - Analyst : Okay. And just to understand like 10% double-digit consumption growth, how do you break this up in terms of, like, say, in terms of pricing led, in terms of volume, volume of footfall led, how do you break that up internally for yourself? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 26, 2024 / 5:30AM, PHOE.NS - Q2 2025 Phoenix Mills Ltd Earnings Call

Question: Kunal Lakhan - CLSA - Analyst : Sure. And my second question was on the Tier 2 city opportunity, right? I mean we have seen some capital deployment there in the last few years and particularly in the last quarter also, Coimbatore and Chandigarh. So how should we look at incrementally on the capital deployment side? So how much would be the focus towards Tier 2 towns? And just an overall just view on the whole --

Question: Kunal Lakhan - CLSA - Analyst : Sure, understood. Thanks so much and all the best.