Nomura has initiated coverage on Phoenix Mills with a ‘Reduce’ rating and a target price of ₹1,400, citing concerns around softening consumption trends in mature malls, delayed revenue ramp-up, and expensive valuations.
The brokerage highlighted that while Phoenix Mills continues to be India’s premier player in the organized mall space with strong operating metrics, the pace of retail consumption growth is slowing. Between FY22 and FY25, the company enjoyed a robust 40% CAGR in retail sales, riding on the post-Covid recovery wave and rapid store additions. However, going forward, Nomura forecasts a more moderate 9% CAGR by FY27 and 11% by FY30, as the base normalizes and consumption growth stabilizes across key metros.
Another concern raised is around the ramp-up trajectory for new malls, many of which are expected to contribute meaningfully only by FY28 and beyond. Projects under construction in cities like Indore, Pune, and Bengaluru have long gestation periods and face the usual regulatory and execution hurdles. This, Nomura believes, limits near-term earnings visibility.
Despite Phoenix’s strong asset quality, high occupancy rates, and reliable annuity income, Nomura argues that valuation has run ahead of fundamentals. The stock is trading near its historical peak multiples, and with slower consumption growth expected, any earnings disappointment could trigger a correction.
That said, the brokerage acknowledged that Phoenix remains a solid long-term story given its pan-India footprint, experienced management, and growing presence in newer catchment areas. But at current levels, the risk-reward appears unfavourable, especially as the sector adjusts to a more normalized retail growth cycle.
