INSUBCONTINENT EXCLUSIVE:
Motilal Oswal has a buy call on Phoenix Mills Ltd
with a target price of Rs 757
The current market price of Phoenix Mills Ltd
is Rs 658.5 Time period given by the brokerage is a year when Phoenix Mills Ltd
price can reach defined target
Phoenix Mills Ltd., incorporated in 1905, is a midcap company with a market cap of Rs 9872.29 crore.
Investment rationale by Motilal
Oswal We believe that PHNX is a unique way to play India’s retail growth story
We prefer PHNX due to its (a) strong operational performance (which provides a competitive edge), (b) scalability (through the CPPIB deal)
and (c) robust cash generation (leading to a reduction in gearing and providing opportunities to acquire new malls).
Moreover, the
commencement of operations at the brownfield expansion malls by FY21 (Lucknow and Indore) provides near-term rental income visibility
The stock trades at a P/E of 32.8x/26x FY19/20E, P/BV of 2.7x/2.5x FY19/20E, and EV/EBITDA of 14.8x/12.9x.
We value retail assets
on DCF-based NAV approach, assuming a cap rate of 8% and a discount rate of 13%
We have a Buy rating on PHNX with an SOTP-based target price of INR757 (upside 19%).
