Motilal Oswal Upgrades Phoenix Mills: A 35% Upside Potential in Real Estate
Motilal Oswal Financial Services upgrades Phoenix Mills from neutral to buy, projecting a 35% upside. New mall commissions and strategic acquisitions are set to bolster the company's growth.
Phoenix MillsMotilal OswalReal EstateStock MarketMall DevelopmentReal EstateSep 02, 2025
Motilal Oswal is optimistic about Phoenix Mills' future, attributing its potential growth to the commissioning of new malls and the company's strategic measures to accelerate consumption at mature malls. These initiatives, combined with an increase in trading occupancy, are expected to sustain healthy consumption growth.
The acquisition of the remaining 49% stake in Island Star Mall Developers is another significant move that will strengthen Phoenix Mills' portfolio of high-quality retail assets, unlocking long-term value. This strategic acquisition is expected to enhance the company's market position and financial performance.
Phoenix Mills' retail rental income is projected to report a Compounded Annual Growth Rate (CAGR) of 21% over the financial years 2025-2027, reaching ₹2,800 crore by FY27. During FY15-25, the company's retail portfolio experienced an 11% CAGR in consumption and a 12% CAGR in rental retail income, reflecting the strong consumption growth trend. As of the June quarter, trading occupancy stood at 89%, slightly down from 91% in March 2025, primarily due to ongoing revamps and tenant churn.
For instance, in Bengaluru, around 10% of the leasable area is under fit-outs or being repurposed from hypermarkets to high-performing fashion anchors. In Pune, outdated anchors and restaurants are being replaced with new, more relevant offerings. Phoenix Mills' management is confident that these initiatives will drive strong growth from FY27 onwards, once the revamps are completed.
The recently-commissioned malls in Lucknow, Indore, and Ahmedabad have achieved an average trading occupancy of 94% within six to eight quarters of operation. Phoenix Mills aims to maintain this level with its existing malls and replicate the success in upcoming malls in Gujarat and Kolkata. Additionally, the company plans to expand Phoenix Palladium in Mumbai, expected to launch by FY26-27, and has acquired 22.1 acres in Coimbatore and Chandigarh Mohali in FY25. These expansions are set to more than double the company's portfolio by FY30.
Motilal Oswal also projects a significant growth in Phoenix Mills' office portfolio. By FY27, in a phased completion, the portfolio is expected to increase nearly fourfold, reaching 7.1 million square feet. This growth will boost rental income to ₹600 crore by FY27, representing a 71% CAGR over FY25-27 or a 3x increase. This trajectory underscores the company's confidence in the long-term demand for office spaces within its mall-based developments.
The hotel segment is also expected to benefit from strong momentum. Phoenix Mills' flagship hotel, St. Regis, has seen a strong improvement in operations due to increased demand. The company is developing a 400-key premium hotel, Grand Hyatt, at its MarketCity mall in Bengaluru, expected to be completed in FY27-28 with an estimated capex of ₹1,000 crore. The third phase of PMC Bengaluru will see another 300-key hotel, and Phoenix Citadel in Indore is also planning a 300-key hotel. The company has also acquired an 11-acre land parcel in Thane in FY24, which is likely to comprise another premium hotel.
These developments will triple Phoenix Mills' hospitality portfolio to over 1,800 keys, with 588 keys currently operational. Of the 17 analysts covering the stock, 14 have a 'buy' rating, one has a 'hold' rating, and two have a 'sell' rating.
Shares of Phoenix Mills Ltd. gained over 4% in early trade on Tuesday, reflecting the market's positive response to the upgrade and the company's promising growth prospects.
Frequently Asked Questions
What is the new price target for Phoenix Mills according to Motilal Oswal?
Motilal Oswal has increased the price target for Phoenix Mills to ₹2,044 per share from ₹1,646, implying a potential upside of 35%.
What are the key factors driving Phoenix Mills' growth?
Key factors include the commissioning of new malls, strategic acquisitions like the remaining 49% stake in Island Star Mall Developers, and initiatives to accelerate consumption at mature malls.
What is the projected CAGR for Phoenix Mills' retail rental income over FY25-27?
Phoenix Mills' retail rental income is projected to report a CAGR of 21% over the financial years 2025-2027.
How much is Phoenix Mills' office portfolio expected to grow by FY27?
By FY27, Phoenix Mills' office portfolio is projected to increase nearly fourfold, reaching 7.1 million square feet.
What are the plans for Phoenix Mills' hospitality portfolio?
Phoenix Mills is developing several hotels, including a 400-key Grand Hyatt in Bengaluru and other projects in Indore and Thane, which will triple its hospitality portfolio to over 1,800 keys.
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