Shares of Phoenix Mills surged nearly 5% recently after the brokerage Motilal Oswal upgraded the stock from “Neutral” to “Buy.” Along with the upgrade, the brokerage raised its price target sharply, from ₹1,646 to ₹2,044 per share—suggesting a potential upside of 35% from recent levels.
This optimistic outlook is grounded in strong performance across the company’s retail, office, and hospitality segments, and solid projections through FY27.
Why the Upgrade Matters
Phoenix Mills is one of India’s leading developers of shopping malls, mixed-use spaces, and hotels, with a growing footprint across key cities. This upgrade reflects confidence in the company’s growth runway, supported by new mall openings, expanding office spaces, and rising hospitality demand.
Here’s a breakdown of the key reasons behind the bullish call:
1. Retail Momentum & Mall Expansion
- Over the past decade (FY15–FY25), the company achieved an impressive 11% CAGR in retail consumption, powered by ~7% like-for-like growth in existing malls and strategic launches in Lucknow, Indore, Ahmedabad, Pune, and Bengaluru.
- Correspondingly, retail rental income soared at a 12% CAGR during this period.
- Looking ahead, Motilal Oswal forecasts a significant 21% CAGR in retail rental income through FY27, targeting ₹2,800 crore by then, with total income expected to touch ₹3,900 crore.
- Newly opened malls have achieved strong occupancy levels quickly, averaging around 94% within 6–8 quarters, signaling strong consumer traction.
2. Office Segment Rapid Expansion
Phoenix Mills is executing a smart “mall of the future” strategy—co-locating modern office spaces within its malls.
- It started with Fountainhead in Pune (0.8 Msf) in late FY22. That success encouraged further expansion.
- Office space is now live across major locations: Bengaluru (1.2 Msf), Chennai (0.4 Msf), and Palladium Mumbai (1.1 Msf).
- New malls in Pune and Bengaluru are also housing approximately 1.2 Msf each in office area.
- Motilal Oswal projects the office portfolio to grow nearly fourfold to 7.1 Msf by FY27, with rental income tripling to ₹600 crore—i.e., a 71% CAGR in this segment.
3. Hospitality Is Gaining Traction
- The hospitality business, anchored by the flagship St. Regis, is delivering improved performance. In Q1 FY26, the hotel posted a strong average room rate (ARR) of around ₹16,425 and healthy EBITDA margins of roughly 47%.
- Expansion is underway:
- A 400-key Grand Hyatt in Bengaluru is slated for completion during FY27–28.
- Another 300-key hotel is planned at the Bengaluru mall’s Phase 3.
- In Thane, a parcel acquired in FY24 is earmarked for a premium hotel addition.
- Combined, these developments will scale the hospitality portfolio up from 588 keys to over 1,800 keys—a threefold increase.
4. Strategic Acquisitions & Portfolio Growth
- Phoenix Mills has acquired the remaining 49% stake in Island Star Mall Developers (ISMDPL), enhancing its premium mall portfolio.
- The deal is expected to be accretive from Day 1, with additional potential from the 2.71 MsF of future development rights (FSI) in the medium term.
- These expansions, coupled with land buys in Coimbatore and Chandigarh-Mohali, position Phoenix Mills to potentially triple its retail footprint by FY30, while maintaining a healthy debt-to-equity ratio.
What Investors Should Watch
| Metric | Forecast |
|---|---|
| Retail Rental Income by FY27 | ₹2,800 crore |
| Total Income by FY27 | ₹3,900 crore |
| Office Rental by FY27 | ₹600 crore |
| Office Portfolio by FY27 | 7.1 Msf |
| Hospitality Keys | Over 1,800 (from 588) |
| Upside from Target | 35% from current levels |
Investors should track quarterly updates on occupancy, rental growth, and performance in new properties to monitor whether the company is on track to meet or exceed these expectations.
Conclusion
Motilal Oswal’s “Buy” upgrade for Phoenix Mills underscores a renewed optimism in India’s real estate and consumption-led sectors. With multiple pillars—retail, office, hospitality, and strategic land development—firing in unison, the company is viewed as set for a robust growth phase through FY27 and beyond.
For market watchers and portfolio managers, Phoenix Mills offers both defensive attributes (through steady rental income) and growth potential (via expansion across segments). Given its track record and strategic vision, the stock warrants a close look for investors seeking exposure to India’s consumption recovery and real estate evolution.