The Phoenix Mills Limited (503100) Earnings Call Transcript & Summary

Good afternoon, everyone. A very warm welcome to all the panel members and shareholders for the 121st Annual General Meeting. We have the required members present for the quorum in this meeting. This meeting is being held through audiovisual means, in accordance with various circulars issued by the MCA and SEBI. The company has made all the necessary arrangements to enable the shareholders to participate and vote on items being considered in this meeting. We sincerely appreciate your presence and participation in this meeting. Now I hand over the proceeding to Chairman, sir. Over to you, sir.

Good afternoon, ladies and gentlemen. I warmly welcome you all to the 121st Annual General Meeting of the shareholders of the company. It is my privilege to address all of you as the Chairman of the company. This meeting is being held through video conferencing, in accordance with MCA and SEBI circulars. I greatly appreciate that you are taking the time to attend the Annual General Meeting of the company, and thank you for joining us virtually today. As the requisite quorum is present for the Annual General Meeting through video conferencing, I, as the Chairman, call the meeting to order. All the directors of your company are present at the meeting through video conferencing from -- Mr. Umesh [ Naik ], partner, DTS and Associates, LLP, the statutory auditors; and Mr. Himanshu Kamdar, partner, Rathi & Associates, at the meeting. Mr. Kailash Gupta, the Chief Financial Officer of the company; and Mr. Bhavik Gala, Company Secretary of the company, are also participating in the meeting through video conferencing. I now request Mr. Bhavik Gala, Company Secretary, to take us through the regulatory matters and general instructions regarding participation in this meeting.

Thank you, sir. Good afternoon, dear shareholders. I, Bhavik Gala, Company Secretary of the company, extend a warm welcome to all of you at the 121st Annual General Meeting of the company. Members may note that this Annual General Meeting has been held through video conferencing, in accordance with the provisions of the Companies Act and the circulars issued by the Ministry of Corporate Affairs and SEBI. Accordingly, physical attendance of the members has been dispensed with, and the facility for appointment of proxies by the members is not available for this AGM. Your company has made all the necessary arrangements for the members to participate and vote for the items to be considered in this Annual General Meeting. All the members who have joined the meeting, have, by default, been placed on mute by the host to ensure smooth and seamless conduct of the meeting. Audio and video will be open when the members speak at the time of the Q&A session as per preregistrations. If there is a connectivity issue at the speakers end, the moderator will mute such speaker and then the next speaker will be invited to speak. The register of directors and key management personnel and their shareholdings, the register of contracts, the certificate from the [ secretary ] auditors of the company relating to the implementation of the company [indiscernible] scheme, and other documents as required to be kept at the AGM and as mentioned in the notice of the AGM, are available electronically for inspection by the members. The notice of the 121st Annual General Meeting and the integrated annual report of the company for the financial year 31st March 2026, containing the directors' report, auditor's report, audited standalone consolidated financial statements and other related documents for the financial year ended 31 March 2026, have been circulated electronically within the statutory period to all the shareholders whose e-mail address are registered with the company or MUFG Intime India Private Limited, the registrar to an issue and share transfer agent of the company, or the depository participants or depositories. Physical copies of the annual reports have been dispatched to those shareholders who have requested for the same. In compliance with the Companies Act [ 2013 ] and SEBI listing regulations, your company has provided the facility of remote e-voting to the shareholders to enable them to cast their votes -- e-voting platform of MUFG Intime India Private Limited. The remote e-voting period was open for 4 days, commencing from Thursday, 24th September 2026 from 9 a.m. IST, and concluded on Sunday, 27th September 2026 at 5:00 p.m. IST. Shareholders attending the AGM who have not cast their votes by remote e-voting and are otherwise not barred from doing so, shall be able to cast their votes electronically during the meeting. E-voting during the AGM is integrated with the video conferencing platform. Once the Chairman announces commencement of e-voting, the voting time on the screens will be activated by moderator to enable such shareholders to cast their votes. They can vote by clicking on the vote tab. The results of e-voting, along with the scrutinizer's report, shall be communicated to NSE and BSE, where the equities of the company are listed, within the prescribed time lines. The Board of Directors have appointed Mr. Himanshu Kamdar, partner, Rathi & Associates, partners and Company Secretaries, to scrutinize the voting process to remote e-voting and voting at the meeting in a fair and transparent manner. Since the AGM is being held through video conferencing and the resolutions forming part of the notice convening this meeting have already been put to work through remote e-voting, the practice of proposing and seconding of resolutions is not required and will not be followed. With this, I now request our Chairman to kindly address the shareholders.

Thank you, Bhavik. Good afternoon again, everyone. It's my pleasure to welcome you all to the 121st Annual General Meeting of the Phoenix Mills Limited. FY '26 performance. FY '26 was a year of strong performance across our businesses. Consolidated revenue grew 16% to INR 4,423 crores, while EBITDA increased 22% to [indiscernible] crores. Retail remains at the heart of our business, and our destinations continued to perform well. Our retail portfolio delivered consumption of 16,587 crores, up 21% over last year. Importantly, this growth came without adding any new mall capacity this year. We have always believed that our destinations must continue to evolve. Phoenix MarketCity is a good -- Pune is a good example. Over the last 13 years, EBITDA from the mall has grown more than fourfold. Yet rather than simply continuing with that, something was already working. We decided to invest in its next phase. We accepted a period of lower occupancy and disruption destination, introducing a more relevant and premium brand mix and improving the arrival experience facade and interiors of the mall. In May this year, it was relaunched as Phoenix Avenue of Stars. The early results are indeed encouraging. In the first quarter of FY '27, consumption grew by 29% at Phoenix Avenue of Stars. This approach is captured in our annual report key built to compound. We see considerable opportunity not only in developing new destinations, but also in continuously improving and reinvesting in the assets we already own. Other businesses also made a good progress during this year. Our office retail portfolio has more than doubled over the last 2 years, and now stands at around 4.8 million square feet. By March 2026, about 70% of the space was leased, that is at least LOI signed. Hospitality delivered another strong year, with EBITDA increasing 14% to INR 2,276 crores, led by the St. Regis Mumbai. Residential bookings more than doubled to INR 471 crores. Together, these businesses make Phoenix a more diversified business, with retail formally at its core. Vision 2030 and development pipeline. Looking ahead, we have a substantial pipeline in place through 2030. A part of our growth will come from the assets we have already built. Our malls have further room to grow as reposition continues and leases come up for renewal. Our newer offices are now entering the next phase, with tenants moving in and earnings beginning to ramp up. Thus, we are developing new retail-led destinations in Kolkata, Surat, Pane, Coimbatore and Chandigarh. We are also expanding our flagship campuses in Lower Parel and Bangalore. Lower Parel is a good example of how we think about creating and growing destinations over time. What started as High Street Phoenix evolved into Phoenix Palladium and was later complemented by the same [ St. Regis ], Mumbai. Between FY '13 and FY '26, EBITDA from this complex increased roughly 4x. Now we are moving into the next phase of growth. Over the next 2 years, we will add more than 2 million square feet of retail and office to this campus alone. In Bangalore, we are taking a similar long-term view. Phoenix MarketCity Bangalore is growing into a much larger mixed-use destination. Once the next phases are complete, the white field campus will increase from about 1 million square feet today to more than 4 million square feet. As I have mentioned, we are changing the name of Phoenix MarketCity, Bangalore to Phoenix Icon because it truly will be an icon. By 2030, we expect our portfolio to reach over 18 million square feet of retail across 13 or more cities and around 9 million square feet of offices, over 2,000 hotel keys and nearly 7 million square feet of residential development. Capital allocation. Supporting the next phase of growth is our ability to generate and reinvest capital. An important milestone during this year was our agreement to acquire CPP Investments' 49% stake in Island Star Malls, our first joint venture with them. Together, we had developed a substantial portfolio of marquee retail and office assets across India. With this acquisition, we will eventually own 100% of the business and benefit fully from its growth. We completed the first payment in November 2025, with the remaining tranches being spread across further tranches. Importantly, the acquisition is being funded substantially through cash generated by assets within Islands Star Mall portfolio and supplemented by borrowing at these assets of cost augmented with our own internal resources. This demonstrates the financial strength of the portfolio we have built and our ability to fund substantial investments while continuing to pursue new growth opportunities. We will continue to reinvest in our business, reward [ shareholders ] and maintain a prudent balance sheet. Sustainability. Beyond our business, we remain committed to the communities around us. Through our car charitable trust, we support water conservation and rural development initiatives, while continuing to invest in renewable energy and sustainable business practices across our portfolio. As we progress through FY '27, our priorities are clear. We continue improving performance of our existing destinations, bringing new developments, allocating capital with discipline. Our next phase of growth is already taking shape across the portfolio. The responsibility is now to execute well and translate these opportunities into sustainable earnings and cash flows. I would like to thank our teams across India for their commitment; our retailer partners, our long-term licenses and customers for their continued trust; and to you, our shareholders, for your long-standing support. I now invite Shishir and Varun to take you through updates across our businesses. Thank you.

Shishir, I think you're on mute.

I'm on. Why don't we like to the presentation, please?

Yes, just give me one second.

Do you all prefer to do the presentation before or after the question answers, normally?

We typically do it before, Atul.

All right.

Just give me one second. I'm sharing my screen.

Thank you, Varun. Good afternoon, everyone. I'll begin with a brief look at our journey and FY 2026 performance before handing over to Varun to take you through the rest of the businesses and the development pipeline ahead. Next please. What began with one mall in 2005 is today a significant real estate platform across retail, offices, hotels and residential. While retail remains at our core, we now operate 12 malls across 8 cities, with a gross leasable area of approximately 11.5 million square feet operational, along with 5 million square feet of completed offices, 2 operating hotels and several premium residential developments. While the scale is very different from where it started, our principles have remained the same. We built strong destinations. We continue to improve them and let each phase create the foundation for the next. Next, please. Our numbers capture this journey well. Our consolidated EBITDA has grown from INR 26 crores in FY 2006 to INR 2,637 crores in FY 2026. This is a 26% compounded growth over 20 years. Behind this chart is a simple lesson: enduring businesses are built one asset and one cycle at a time, and progress comes from execution being repeated consistently over many, many years. Next, please. This long-term progression continued in FY '26. Revenue grew 16% to INR 4,423 crores, EBITDA grew 22% to INR 2,637 crore, and net profit attributable to owners grew 24% to [ INR 1,224 ]. Operating free cash flows increased 23% to INR 2,140. More importantly, we achieved this growth without adding any new mall capacity during the year. Next, please. Consumption across our malls grew 21% to INR 16,587 crores, while rental income grew 10% and retail EBITDA grew 12%. For us, the important point is that this growth came from the portfolio already in operation, which is a great indication of the underlying strength and productivity of these destinations. Next, please. Phoenix Avenue of Stars, Pune is a prime example of what we continue to do over the years at each asset. We've learned over the years that success is not an excuse to stand still. During the year, we repositioned Phoenix MarketCity Pune as Phoenix Avenue of Stars, with a new identity, upgraded experience and more premium brand mix. The objective was to not only refresh the property, but to make an extremely successful destination more relevant for the next decade. Next, please. The early responses have been encouraging. In Q1 FY '27 consumption at Phoenix Avenue of Stars grew 29% and trading density grew 26%, while retail rental income grew 13%. The lesson is that real value of a strong asset is not only in what it earns today, but its ability to keep evolving with its customers' aspirations and the evolving catchment, and this is what allows an established destination to keep creating value over the long term. Before I hand off to Varun, I'd like to mention that our platform is stronger than it has ever been before and the opportunity ahead remains significant. Varun, our Executive Director, has been closely involved in our strategy and growth agenda, and will take you through the rest of the portfolio, the development pipeline and the next phase of growth. Thank you.

Thank you, Shishir. Dear shareholders, let me take you through the rest of the portfolio and the development pipeline ahead. I will move to offices first. We ended fiscal year 2026 with approximately 4.8 million square feet of offices across 5 assets and 4 cities. Importantly, we delivered 3 new trade A city center office assets during 2025, adding close to 3 million square feet of new capacity. We have visibility on occupancy across the portfolio, ramping towards approximately 90% by the end of this financial year. And as respace converts into revenue-generating occupancy, this should support sustained strong growth in reported office income and EBITDA over the next 2 to 3 years. The 3 new office assets are Millennium Towers on the left, which is in Puna; Phoenix Asia towers in the center, which is in Bangalore; and One National Park on the right of the screen in Chennai. Each of these office assets is integrated with our retail destinations, giving tenants access to a broader work, retail, dining and [indiscernible] ecosystem. The St. Regis, Mumbai is the meaningful operating contributor to our portfolio. Today, overall, in FY 2026, [indiscernible] generated about INR 596 crores of operating income and about INR 276 crores of EBITDA. Despite the difficult macro conditions, the hotel portfolio saw EBITDA growing by 14% year-on-year. [indiscernible] a strong year, gross bookings for completed units in One Bangalore West and Kessaku in Bangalore were at INR 471 crores, and collections were very strong at INR 467 crores. We continue to approach residential selectively, focusing on premium projects and cash flow generation. Let me now move to [indiscernible]. For Phoenix Grand Victoria, we were -- into Eastern India. This asset is spread over approximately 1 million square feet of leasable area and is targeted for completion in 2027. In the same market -- in the impact in the same micro market and in proximity, we are also developing a premium residential project with approximately [indiscernible] of 1 million square feet. We're also expanding with our second retail destination in Gujarat. We have the mall coming up in Surat with approximately 3 million square feet of retail space, and this is also targeted for completion in 2027. [indiscernible] to new markets, we continue to densify and reinvest in our most established urban campuses. At [indiscernible], we are adding almost 2 million square feet of new area of retail and offices, with further development potential being planned beyond this space as well. We are also taking the same long-term approach at [indiscernible], another of our most established urban campuses in our portfolio. The existing mall, and Atul spoke about relaunching and renaming it as Phoenix Icon in [indiscernible]. This mall comprises approximately 1 million square feet of retail, and this destination is evolving into a much larger [indiscernible] campus, with additional paid hotel and offices. Phase 2 is already under construction and scheduled for delivery by end of 2027. And Phase 3 is also secured approvals and we are moving into the construction phase now. In parallel, we have a lot of exciting new developments with -- retail developments at Thane, Chandigarh and Coimbatore expected to add more than 4 million square feet to our retail space in our portfolio. Importantly, across these 3 locations, retail is only the first layer. These sites also have further development potential for offices, hotels and/or residential alongside the retail development that we have planned. And this gives us long-term visibility into the portfolio we are building for 2030 and a further runway for growth beyond 2030 as well. Taken together, the existing pipeline gives us a clear path to a much larger platform by 2030. Land and development potential for the 2030 pipeline is already secured, and we expect to have an operating retail area of over 18 million square feet, about 9 million square feet of offices and over 2,000 hotel keys and about 7 million square feet of cumulative residential silver area by 2030. I will now hand off to Shishir to take you through the rest of the presentation. Thank you.

Thank you, Varun. Well, this slide captures a very important part of our journey. If we just look at the last 8 years, we've grown our business substantially while keeping the balance sheet lean and healthy. For us, an important part of this growth was not only about how much we have grown, but how we have grown. Since March 2018, our EBITDA has grown from INR 778 crores to INR 2,637 crores, and our asset base has grown more than 3x. Yet over the same period, our net debt has actually reduced from INR 3,922 crores to INR 3,160 crores. We have remained ambitious in building the business while keeping the balance sheet lean and healthy. As we enter the next phase of growth, that discipline will remain just as important to us. Another important milestone has been our acquisition of CPP Investments' stake in Island Star Mall developers. When we began this partnership, it was with a clear objective to build the highest quality portfolio today together. And today, this platform includes some of our most loved retail-led mixed-use destinations across Bengaluru, Pune and Indon, with approximately 6.6 million square feet operational and significant growth in terms of densification still available. We are now progressively increasing our ownership from 51% to 100%. The first tranche payment was completed in November 2025, taking our stake to 58.33%. The total transaction consideration is approximately INR 5,449 crores. And importantly, the payout is being funded through -- largely through surplus cash, internal accruals generated by the platform and supplemented by measured debt. We know these assets. We know these markets, and we know the development opportunities that remain. Moving to 100% ownership allows us to participate fully in the value that this platform can create over the years ahead. Over the years, one thing has become pleasingly clear to us, good sustainability practices and good business practices are not separate from each other. Energy efficiency improves operating efficiency. Clean buildings can lower the structural cost of our operations of these assets. Water recycling, renewable energy and better waste management makes our developments more resilient over the long term. That is why sustainability is increasingly being built into the way we design, develop and operate our portfolio, rather than being treated simply as a compliance requirement. We've built a much larger and stronger platform over the years while remaining disciplined in how we deploy capital. We are well positioned for the next phase of growth, and we thank you for your continued trust and support. Thank you, Varun. Over to Mr. Ruia.

Thank you, Shishir and Varun for your presentation. With your permission, I will now take the notice of the 121st Annual General Meeting. And Board report, as circulated to all the shareholders, as read. The auditor report issued by the statutory auditors on the stand-alone and consolidated financial statements of the company for the financial year ended 31st March '26, and the secretarial auditors report for the financial year ended 31st March '26, do not contain any qualifications, observations, adverse comments or other remarks. With your permission, I will take these reports of the auditors as read. We will now look through the items of business to be transacted at this AGM. There are 4 items for the approval of shareholders to date. All the items are of ordinary business, which have been set forth in the notice of AGM. The objectives and implications of the resolutions proposed at the AGM are also set out in the notice of the AGM, and for the sake of brevity, are not being repeated again. Before beginning the Q&A session, I request the moderator to activate the e-voting window now so as to enable members attending the AGM who have not already cast their vote by remote e-voting to cast their vote electronically during this meeting. The window for electronic voting shall remain open until 15 minutes post conclusion of the meeting. Thereafter, the same shall be closed. Members may choose to vote now, please. Company has received requests from some shareholders to register them as speakers at the meeting. In case members wish to seek any clarifications, they may raise it at Q&A session. Accordingly, the floor is now open for the members to ask their questions or express their views. The moderator will kindly facilitate this session. I request all speakers to stick to points arising out of the agenda items only. Mr. Shishir Shrivastava and Varun Parwal will consolidate and clarify all queries of members at the end. I would now request the moderator to invite the speakers one by one.

[Operator Instructions] Now I invite our first speaker, [indiscernible].

Can you hear me?

Yes.

Okay. Respected Chairman, Sri Atulji; Vice Chairman and MD, Sri Shishirji; CFO, Sri Kailashji. [Foreign Language] Good afternoon, everyone. [Foreign Language] Very well done, very good. Keep it up. [Foreign Language] Sir, page number, 57 per reward and recognition [Foreign Language] 121st AGM or in 121st [Foreign Language] Very well done, very good. Keep it up. [Foreign Language] Sir, I'm wishing you all the best for the future success. [Foreign Language]

Thank you, [indiscernible]. Thank you so much. [indiscernible]

Now I invite our speaker #2, [indiscernible].

[ Mr. Aspi ], are you there?

Sir, I think there is some technical issue. We'll move on to the third speaker.

Give them half a minute.

Okay, sir.

Okay. Please move on to the next speaker.

Our third speaker is Mr. [indiscernible]. He's not available, sir. We'll move on to the fourth speaker, Mr. Hariram Chaudhry.

Now I'm unmuted?

Yes, Mr. Chaudhry. Welcome. How are you?

I'm fine, Atulji. [Foreign Language]

Very good suggestion, Mr. Chaudhry. Very, very good suggestion. I really like this suggestion. There should be some real playing for that 15 minutes on repeat mode. That's what Mr. Chaudhry's suggestion. Thank you. That's an excellent suggestion.

And I appreciate [indiscernible] not even a number of the speakers also along with the name of the speaker. Now Mr. Chairman, about the years I have spoken, and suggestion is that meeting can be held in hybrid form, online as well as physical. This is done in High Court. This is done by [indiscernible]. This is done by my own company, where I'm a director. And [indiscernible] is negligible. So please, future meeting may be held in hybrid form. And in July or August, not in September. That is a suggestion. Next is [indiscernible] get together of speakers already in Bombay [indiscernible] by many companies [Foreign Language].

I think Mr. Hariram Chaudhry's network has dropped. So we can go to the next speaker, please.