Shares of The Phoenix Mills Ltd have risen nearly 8% in the past two sessions, buoyed by its March-quarter (Q4FY26) business update. While the quarter was robust for its retail consumption and hotel (hospitality) segments, residential pre-sales were a dampener, falling 43% year-on-year, mirroring broader trends across retail, hospitality and real estate.
Phoenix’s retail consumption growth of 31% year-on-year in Q4FY26 was the fastest in FY26, beating analysts’ expectations. The performance is particularly notable as the company added no new malls during the year. Phoenix benefits directly when retail sales rise because its rental revenue model is closely linked to tenants’ sales. In that sense, the stock doubles as a proxy play on retail consumption.
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.
Phoenix’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. Investors may instead want to focus on the segment that drives the bulk of the company’s sum-of-the-parts valuation: retail leasing.
According to Motilal Oswal Financial Services estimates, 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.
That doesn't appear demanding when compared with listed retailers such as Trent Ltd and Avenue Supermarts Ltd, which trade at 40x and 55x Ebitda multiples.
For some investors, Phoenix could well be a case of retail proxy play at a cheaper valuation. While the risks from a slowdown in retail consumption apply to all retail companies, the other specific risks for Phoenix’s investors could be aggressive deployment of rental leasing cashflows into real estate construction and hotels business that may not deliver comparable returns.
Manish Joshi is a chartered accountant (passed in first attempt) with experience of capital markets spanning equities, derivatives, investment banking and private equity in various roles ranging from analyst to fund manager/trader. Previously, he worked with BNP Paribas, Karvy Stock Broking and The Financial Express. This rich experience has further helped him improve analytical skills and understanding of various businesses. At Mint, he writes on topics across sectors.<br><br>Over the last two years of his association with Mint, he has focused on sharing his knowledge accumulated over the years with the readers. Having deep knowledge of accounting standards by virtue of the highest qualification in accounting, he can evaluate corporate balance sheets better. He tries to give a differentiated perspective on valuation of stocks and corporate developments backed by sound logic.<br><br>His goal is to provide a unique value proposition to readers by blending fundamental views on a stock with shifting market dynamics, which is possible because he is an active trader himself. His columns are useful for investors and students who are pursuing management courses by demystifying complex concepts and analytical jargon. His mantra is to give maximum value for the money and time spent by the reader.