The Phoenix Mills Limited — Q1 FY26 earnings call

Call held 24 Jul 2025

Management summary

The Phoenix Mills Limited reported a strategic Q1 FY26, marked by the acquisition of the remaining 49% stake in ISMDPL for ₹5,449 crores, consolidating control over a key growth platform. The company delivered a 6% YoY increase in Group EBITDA to ₹544 crores, driven by strong retail consumption growth of 12% and robust hotel performance. Despite a temporary dip in retail trading occupancy due to planned repositioning, management expressed confidence in future rental income growth and aggressive office leasing targets for its newly completed assets.

Highlights

  • Strategic acquisition of 49% stake in ISMDPL for ₹5,449 crores, providing full ownership and control over a high-performing retail and office platform.

  • Strong retail consumption growth of 12% YoY across malls, indicating robust demand.

  • Hotel portfolio delivered strong performance with revenue up 11% to ₹130 crores and EBITDA up 19% to ₹58 crores.

  • Significant progress in office leasing, with a target of 90% occupancy by 2026 for completed assets, currently at 6% leased.

  • Prudent balance sheet management, with group net debt moderately reduced and cost of debt at 7.92% for Q1 FY26.

Concerns

  • Temporary dip in retail trading occupancy due to a planned repositioning exercise across Phoenix MarketCity malls, impacting rental income growth by 5-6% for the quarter.

  • One-time depreciation of ₹7-8 crores due to demolition of the Courtyard Block at Phoenix Palladium for redevelopment.

  • Roadworks near Phoenix Citadel Indore are currently causing interim hardship for mall visitors, though expected to be completed by 2026.

Key financials

  1. Retail Rental Income ₹506 Cr +4%YoY
  2. Hotel Revenue ₹130 Cr +11%YoY
  3. Hotel EBITDA ₹58 Cr +19%YoY
  4. Residential Revenue Recognition ₹40 Cr
  5. Group EBITDA ₹544 Cr +6%YoY
  6. Cost of Debt 7.9%

What they filed

Q1 FY27: revenue up 12.8%, net profit up 22.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue918 975 1,016 953 1,115 +21%1,121 +15%1,233 +21%1,075 +13%
EBITDA518 553 560 564 667 +29%656 +19%750 +34%642 +14%
Net profit292 353 348 321 384 +32%366 +4%485 +39%394 +23%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹168 Cr

as of 2025-06-30 quantified

Inflow this quarter

₹168 Cr

Pipeline

other

Kolkata residential project sales gearing up for launch.

Residential sales were strong, with price hikes accepted by the market, and revenue recognition will largely follow in coming quarters.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹1,200 Cr Largely through the ISMDPL platform's cash flows and additional leverage headroom, with PML's other entities free to use cash for acquisition or expansion.
    • ISMDPL Phase 2 completion ₹1,000 Cr
    • Overall CAPEX for next five years (excluding Thane, Coimbatore, Chandigarh) ₹5,000 Cr
    I think about Rs. 1,200 crores to Rs. 1,300 crores over the next 12 months. ... So, barring the new acquisitions and the three assets basically we are talking about, excluding Thane, Coimbatore and Chandigarh, the CAPEX for next five years would be in the range of around Rs. 5,000 crores to Rs. 6,000 crores, and against that the cash flow generation will be much higher. ... Phase2, which is ongoing at ISML will roughly require about Rs. 1,000 crores between now and 2027 to take it to completion.
  • Debt Gross ₹4,435 Cr Cost 7.9%
    Our Group debt stood at about Rs. 4,435 crores and our net debt to EBITDA reduced moderately from the March ending quarter. We have also seen a significant reduction in our cost of debt. Cost of debt came at about 7.92% for quarter ending June 2025.
  • M&A Island Star Mall Developers Private Limited (ISMDPL) Acquisition · Announced · Consideration ₹[object Object] (cash)

    Strengthens control over a high-performing retail and office platform, reinforces long-term vision, captures full operating free cash flows, provides strategic control over capital allocation and execution timelines, and unlocks further value.

    The buyout is significantly accretive for PML from the first year itself, with PML's attributable EBITDA expected to grow manifold.

    We are glad to share that our Board of Directors has approved a proposal to acquire 49% stake in Island Star Mall Developers Private Limited platform... The agreed consideration for the proposed transaction is Rs. 5,449 crores payable to CPP Investments over a 36-month period in four tranches, subject to applicable laws, and any adjustments including those related to prepayment of tranches.
  • Liquidity Liquidity disclosed PML's FY25 operational free cash flows (excluding ISMDPL) were about Rs. 1,225 crores, with potential to exceed Rs. 6,000 crores over the next five years. The company maintains a prudent balance sheet and significant headroom for investment.
    Overall, we have continued to maintain a prudent balance sheet and disciplined capital deployment, which gives us significant headroom to continue investing in high quality assets while maintaining our financial flexibility to pursue growth. ... If we look at our FY25 operational free cash flows, they were about Rs. 1,225 crores at the PML level excluding the ISMDPL and its subsidiaries. Now just assume a similar run rate over the next five years without anything else that itself could potentially translate to over Rs. 6,000 crores of operating free cash flows.

Guidance & targets

Capex

  • Group Capex Capex · next 12 months · High confidence ₹1,200-1,300 crores
    I think about Rs. 1,200 crores to Rs. 1,300 crores over the next 12 months.

    — Shishir Shrivastava

  • ISMDPL Phase 2 Capex Capex · now to 2027 · High confidence ₹1,000 crores
    Phase2, which is ongoing at ISML will roughly require about Rs. 1,000 crores between now and 2027 to take it to completion.

    — Shishir Shrivastava

  • Overall Capex (excluding Thane, Coimbatore, Chandigarh) Capex · next five years · High confidence ₹5,000-6,000 crores
    So, barring the new acquisitions and the three assets basically we are talking about, excluding Thane, Coimbatore and Chandigarh, the CAPEX for next five years would be in the range of around Rs. 5,000 crores to Rs. 6,000 crores, and against that the cash flow generation will be much higher.

    — Kailash Gupta

Office Leasing

  • Occupancy for completed office assets Office Leasing · 2026 · High confidence 90%
    Our internal target is to achieve a 90% leasing in 2026, and we have a strong leasing pipeline in place.

    — Shishir Shrivastava

EBITDA Growth

  • ISMDPL EBITDA EBITDA Growth · by 2030 · Medium confidence multiples

    From ₹617 crores (FY25) today

    Having said that, in FY25 the EBITDA at the ISMDPL platform was at Rs. 617 crores. And with all the ongoing developments which are nearing completion, plus what is planned to be completed by 2030 in this platform, we hope to see the EBITDA grow by multiples over this period of time, and it becoming highly value accretive to us.

    — Shishir Shrivastava

Project Completion

  • Phoenix Grand Victoria Mall, Kolkata Project Completion · 2027 · High confidence Completed
    So, we will take the first part which is the completion of, we expect the (Phoenix) Grand Victoria Mall, Kolkata to be completed in 2027.

    — Shishir Shrivastava

  • Surat Mall Project Completion · 2027 · High confidence Completed
    Surat is also expected to be completed in 2027.

    — Shishir Shrivastava

  • Phoenix Palladium Mumbai (Retail and Offices) Project Completion · end of 2026 and mid of 2027 in phases · High confidence Completed
    We also have a sizable expansion going on at our flagship property, (Phoenix) Palladium Mumbai which has retail and offices, all of this is expected to be completed by end of 2026 and mid of 2027 in phases.

    — Shishir Shrivastava

  • Phoenix MarketCity Bangalore Phase 2 (Gourmet Village) Project Completion · 2026 · High confidence Launched
    We will be launching the Gourmet Village in 2026, a brand new floor of F&B and entertainment spanning 19 new experiential dining options set in a beautiful theme.

    — Shishir Shrivastava

  • Phoenix MarketCity Bangalore Phase 3 (Retail, Offices, Hotel) Project Completion · by 2030 · High confidence Completed
    Moving on to Phase 3 where this campus further expands, we intend to add a second hotel of approximately 300 keys, offices of about 1.2 million square feet and a further retail expansion of about 600,000 square feet by 2030.

    — Shishir Shrivastava

What to watch in Q2 FY26

ISMDPL acquisition approvals

next quarter
Current Subject to shareholder and CCI approvals
Target Approvals received and transaction progressing

Why it matters

Timely completion of the acquisition is crucial for PML to realize the strategic benefits of full ownership and control.

The transaction is subject to shareholder approvals, CCI approvals and other customary approvals.

Risks & concerns

  • Temporary dip in retail trading occupancy and rental income

    medium

    Planned repositioning exercise across Phoenix MarketCity malls (Mumbai, Pune, Chennai, Bengaluru) led to a 5-6% impact on rental income growth for Q1 FY26, but is temporary and strategic for long-term value.

    Management acknowledged

  • Impact of demolition on rental income

    low

    Demolition of the Courtyard Block at Phoenix Palladium resulted in a quarterly rental loss of ~₹12 crores and a one-time depreciation of ₹7-8 crores.

    Management acknowledged

  • Disruption from infrastructure development

    low

    Roadworks near Phoenix Citadel Indore are causing interim hardship for mall visitors, though a new flyover and underpass are expected to be ready by 2026 to improve access.

    Management acknowledged

Q&A highlights

5 direct
Valuation methodology and debt for ISMDPL acquisition Direct
Puneet, we have not approached this transaction on a cap rate basis, okay. We see it as being significantly value accretive over the next five years... In FY25 the EBITDA at the ISMDPL platform was at Rs. 617 crores... Gross debt is about Rs. 950 crores and currently it is also about -- So, adjusting for cash on the balance sheet, the net debt is about Rs. 650 crores.

Clarifies that the acquisition was not based on a simple cap rate but on future value accretion, and provides specific debt figures for the acquired entity.

Asked by Puneet Gulati, HSBC

Strategic benefits of 100% ownership of ISMDPL Direct
From PML's perspective I think it helps, because minority leakages are kind of addressed, it reduces that or eliminates minority leakages entirely. It allows us PML to upstream or the cash flows to be upstreamed to PML for efficient utilization. And we estimate that our EBITDA could potentially grow 3x to 4x over a period of time, and this will all result in a growth to PML's PAT.

Highlights the core strategic advantages of the acquisition, including financial flexibility, operational control, and significant projected EBITDA/PAT growth for PML.

Asked by Puneet Gulati, HSBC

Impact of planned churn and demolition on Q1 retail rental income Direct
The planned churn and the loss of rent from convergence (Courtyard) block between them have a 5% to 6% impact on our rental income growth for the quarter.

Provides a quantitative explanation for the discrepancy between strong consumption growth and lower rental income growth, attributing it to strategic repositioning and redevelopment activities.

Asked by Murtaza Arsiwalla, Kotak Securities

Visibility on office occupancy ramp-up for newly completed assets Direct
So, we have every reason to be confident about seeing a significant ramp-up in the next 12 months. In calendar year 2026, our target is to see a 90% occupancy across office assets. ... in Chennai, the office asset, we have completed about 60% leasing in about four months. And we expect to see a similar trend even in Bengaluru and Pune.

Offers clear guidance and strong confidence regarding the rapid leasing of new office spaces, which is a key driver for future annuity income.

Asked by Murtaza Arsiwalla, Kotak Securities

CPP Investments' rationale for early exit and precedent for other JVs Partial
I cannot speak for CPPIB (CPP Investments), their rationale is obviously well-deliberated. As I mentioned earlier, I want to clarify that we had no stated commitment or contractual commitment to provide an exit to CPPIB. I think it's their own considerations on their timeline of their investment, etc. ... Not a precedent for CPP to look for an exit in the other JVs where we have ongoing construction or otherwise.

Addresses concerns about the nature of the partnership with CPP and clarifies that this exit is not a precedent for other ongoing joint ventures, providing reassurance about future stability.

Asked by Pritesh Sheth, Axis Capital

Funding strategy for the ISMDPL acquisition and impact on other growth plans Direct
So, we are not compromising in terms of our expansion projects, which we will continue to do because largely the transaction will be paid through the ISMDPL platform. So, effectively the PML and its other entities are free to use its cash for acquisition or expansion.

Reassures investors that the significant acquisition will be largely self-funded by the acquired platform's cash flows, preserving PML's liquidity for other growth initiatives.

Asked by Girish Choudhary, Avendus Spark

2 min read 5 chapters

Detailed narrative

Strategic Acquisition of ISMDPL Stake

The Phoenix Mills Limited announced the acquisition of the remaining 49% stake in Island Star Mall Developers Private Limited (ISMDPL) from CPP Investments for ₹5,449 crores. This consideration will be paid over a 36-month period in four tranches, with flexibility for prepayment. This move grants PML 100% ownership, enabling unrestricted access to cash flows, full control over capital allocation, and the ability to upstream cash flows for efficient utilization. Management expects this acquisition to be significantly value accretive, with ISMDPL's FY25 EBITDA of ₹617 crores projected to grow by multiples by 2030.

Q1 FY26 Financial Performance Highlights

For Q1 FY26, the company reported a 6% YoY growth in Group EBITDA, reaching ₹544 crores. The retail portfolio saw consumption grow by 12% YoY, with rental income increasing 4% to ₹506 crores, despite a temporary 5-6% impact from planned churn and demolition activities. The hotel segment delivered strong results, with revenue up 11% to ₹130 crores and EBITDA growing 19% to ₹58 crores. Residential gross sales exceeded ₹168 crores, with ₹40 crores recognized as revenue in Q1, and the balance expected in coming quarters.

Office Portfolio Expansion and Leasing Momentum

The company has made significant strides in its office portfolio, completing Phoenix Asia Towers and three towers in Pune, with OC received for most. The total completed office space is ~2.2 million sq ft, currently 6% leased. Management has set an ambitious target of achieving 90% occupancy by 2026, citing a strong leasing pipeline. For instance, the Chennai office asset achieved 60% leasing in just four months, and similar trends are expected in Bengaluru and Pune, driving future annuity earnings.

Retail Portfolio Repositioning and Future Growth

A strategic repositioning exercise is underway across Phoenix MarketCity malls in Mumbai, Pune, Chennai, and Bengaluru, leading to a temporary dip in trading occupancy (e.g., Phoenix MarketCity Bangalore from 98% to 84%). This initiative aims to replace low-efficiency formats with stronger, higher-yield tenants and premium brands, enhancing the overall brand mix. Management anticipates that once trading occupancy stabilizes at 95%+, the retail portfolio will deliver much stronger rental income growth and sustain double-digit EBITDA growth.

Future Development Pipeline and Capex Plans

The Phoenix Mills has an extensive development pipeline, including the completion of Phoenix Grand Victoria Mall (Kolkata) and Surat by 2027, and Phoenix Palladium Mumbai (retail and offices) by end of 2026/mid-2027. Phase 2 of Phoenix MarketCity Bangalore will see a Gourmet Village and a 400-key Grand Hyatt launching in 2026, along with 400,000 sq ft of offices. Phase 3, by 2030, includes a second hotel (~300 keys), 1.2 million sq ft of offices, and 600,000 sq ft of retail expansion. The company plans a group-level capex of ₹1,200-1,300 crores over the next 12 months, with ₹1,000 crores allocated to ISMDPL Phase 2 completion by 2027.

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