Phoenix Mills Ltd shares have risen nearly 8% in the past two sessions following its March-quarter (Q4FY26) business update. According to reports from Mint, the quarter demonstrated robust performance across the company's retail consumption and hotel segments. The company's retail consumption growth of 31% year-on-year in Q4FY26 was the fastest in FY26, significantly beating analysts' expectations. This strong performance is particularly notable as the company added no new malls during the year, indicating organic growth in existing properties.
As reported by Mint, Phoenix benefits directly from rising retail sales due to its rental revenue model being closely linked to tenants' sales. Nomura estimates Phoenix's retail rental revenue to grow 16% year-on-year in Q4FY26. For the first nine months of FY26, retail consumption grew 17%, translating into a 9% rise in rental income. The company's retail consumption growth of 31% year-on-year in Q4FY26 represents the fastest growth rate achieved during the fiscal year.
According to Motilal Oswal Financial Services estimates reported by Mint, the retail leasing segment could post an Ebitda of about ₹2,900 crore in FY26, compared with roughly ₹400 crore from the hotel business. With Phoenix's market capitalization at around ₹60,000 crore and net debt likely near ₹5,000 crore, the enterprise value works out to about ₹65,000 crore. After subtracting an estimated ₹13,000 crore in valuation for the construction and hotel businesses, the retail leasing arm is valued at about ₹52,000 crore, implying an EV/Ebitda multiple of 18x.
As reported by Mint, residential pre-sales were a significant dampener, falling 43% year-on-year, mirroring broader trends across retail, hospitality and real estate sectors. This sharp decline in residential pre-sales highlights the risks from the company's real estate business, which could be a concern for investors. The company's multiple business lines often move in different directions, making consolidated Ebitda less useful as a yardstick, particularly because accounting for real estate construction differs from that for retail and hotels.
According to Mint, Phoenix could well be a case of retail proxy play at a cheaper valuation compared to listed retailers such as Trent Ltd and Avenue Supermarts Ltd, which trade at 40x and 55x Ebitda multiples respectively. However, investors should consider that while risks from a slowdown in retail consumption apply to all retail companies, specific risks for Phoenix include aggressive deployment of rental leasing cashflows into real estate construction and hotels business that may not deliver comparable returns.
