Mall revenues set to halve this financial year due to Covid, says Crisil

The top-10 Crisil-rated malls have a total rated debt of Rs 4,200 cr and a high DSCR of 1.5 times, so impact on their credit quality is likely to be limited in the near term, the agency says

Revenues of mall operators are set to halve this financial year because of the Covid-19 pandemic-driven lockdowns, according to Crisil’s analysis of the top 10 malls it rates.  

These malls have a total rated debt of Rs 4,200 crore and cover 7.5 million square feet (msf), with a pan-India presence. These have strong sponsors and a high debt service coverage ratio (DSCR) of 1.5 times on average. 

"Hence, notwithstanding pressure on revenues, impact on credit quality of Crisil-rated malls is expected to be limited in the near term. Much of the impact on mall revenue is because multiplexes, food courts, restaurants and gaming zones have not yet opened in many locations as per government orders," Crisil said. 

"These businesses, which contribute about 22 per cent to the total revenues, have borne the brunt of the impact on operations due to social distancing and are also expected to take the longest to recover," Crisil added.

For other categories such as apparels, cosmetics, electronics, and bookstores, which contribute 75 per cent of mall revenues, consumption is still low at 30-35 per cent of previous years’ numbers in the first month of operations post reopening. 

With revenues dented and recovery expected to be slow, these businesses have started renegotiating their contracts with mall owners – for waivers in lease payments, or discounts over the period of lockdown and in the medium term, thereby impacting mall revenues, it said.