Rental income trajectory of The Phoenix Mills gets a consumption boost

Robust consumption growth, improving office occupancy and healthy hotel performance in the June quarter have reinforced brokerages' positive outlook on The Phoenix Mills

The largest listed mall owner and operator in the country, The Phoenix Mills, delivered a strong performance in the first quarter (April-June/Q1) of 2026-27 (FY27), driven by robust consumption growth, office leasing momentum, and healthy operational metrics in its hotel business. Given the better-than-expected performance, brokerages remain positive on the outlook for its key businesses. The stock gained over 3 per cent on Thursday, taking its cumulative gains over the past month to about 20 per cent. At the current price of ₹2,088, the stock trades at 23x its 2027-28 enterprise value-to-operating profit.

 

Consumption at its operational malls in Q1FY27 stood at ₹4,727 crore, up 32 per cent year-on-year (Y-o-Y) and 11 per cent sequentially. This was well ahead of the Street’s expectation of 25 per cent growth for the quarter. HSBC Research said that this was the third consecutive quarter of more than 25 per cent consumption growth for the mall operator. The brokerage also highlighted strong revenue per available room (RevPAR) growth across both hotel assets, while office occupancy inched up. It has an ‘accumulate’ recommendation with a target price of ₹2,230.

 

According to the company, the performance was supported by healthy consumption trends across its portfolio, with double-digit growth across most assets. It has also repositioned some of its properties through premiumisation initiatives aimed at improving the tenant mix and customer experience. During the quarter, Phoenix Marketcity Pune was relaunched as Phoenix Avenue of Stars.

 

As in previous quarters, Q1FY27 retail income growth is expected to lag consumption growth. However, given the stronger-than-expected consumption, Nomura Research has raised its Q1FY27 retail income growth estimate by 3 per cent and now expects retail income to reach ₹610 crore. This would represent Y-o-Y growth of 20 per cent, compared with its earlier estimate of 17 per cent. The brokerage has a ‘neutral’ rating with a target price of ₹2,023.

 

The office portfolio also saw stronger leasing demand, with occupancy improving to 72 per cent at the end of June from 70 per cent at the end of March. While gross leasing of 190,000 square feet was completed during the quarter, the company expects occupancy to improve further as leasing activity remains healthy.

 

The hotel portfolio also delivered a strong performance, with The St Regis Mumbai and Courtyard by Marriott Agra recording RevPAR growth of 15 per cent and 23 per cent Y-o-Y, respectively, supported by healthy occupancy levels and double-digit growth in room rates.

 

JP Morgan Research has an ‘overweight’ rating on the company with a target price of ₹2,000. It took note of investor concerns that easing gold prices could weigh on consumption growth and, in turn, rental income. However, jewellery accounted for 16 per cent of consumption in 2025-26 despite occupying only 2 per cent of the trading area. Moreover, profit-sharing rentals from jewellery tenants are relatively limited, which the brokerage believes caps downside risk.

 

About 90 per cent of the company’s rental income is fixed, providing strong downside protection, while the remaining 10 per cent comes from revenue-sharing arrangements, allowing it to benefit from higher tenant sales, according to SBI Securities. The brokerage added that the company’s growth is being driven by retail repositioning, marquee brand additions, expansion of its office portfolio, residential cash flows, and disciplined financial management. It has a ‘buy’ rating with a target price of ₹2,230.