Phoenix Mills : Conference Call Transcript Q4 FY 2024

	Corp. Office: Shree Laxmi Woolen Mills Estate, 2nd Floor,
	R.R. Hosiery, Off Dr. E. Moses Rd. Mahalaxmi, Mumbai - 400 011
	Tel: [phone] Fax: [phone]
	CIN No. : L17100MH1905PLC000200
May 22, 2024
To,
BSE Limited	National Stock Exchange of India Limited
Phiroze Jeejeebhoy Towers	Exchange Plaza,
Dalal Street, Fort,	Bandra-Kurla Complex, Bandra East,
Mumbai- 400 001	Mumbai- 400051
Security code: 503100	Symbol: PHOENIXLTD
Dear Sir/Madam,

Sub: Transcript of Earnings Conference Call

This is further to our letter dated May 18, 2024, wherein we had informed the exchange about the conclusion of our Earnings Conference Call held on that date with Analysts / Institutional Investors on the Audited Standalone and Consolidated Financial Results of the Company for the quarter and financial year ended March 31, 2024, please find attached herewith the Transcript of the said Earnings Conference Call.

The enclosed Transcript is also available on the Company's website and can be accessed at https://www.thephoenixmills.com/investors/FY2024/Earnings-Call-Transcript.

You are requested to take the same on record.

Yours faithfully,

For The Phoenix Mills Limited

GAJENDRA MEWARA

Digitally signed by

GAJENDRA MEWARA Date: 2024.05.22 22:33:32 +05'30'

____________________

Gajendra Mewara Company Secretary Mem. No. A22941

Encl.: As enclosed

Regd. Office : The Phoenix Mills Ltd., 462 Senapati Bapat Marg, Lower Parel, Mumbai 400 013. Tel : [phone] / 8 / 9

Fax : [phone] E-mail : [e-mail] www.thephoenixmills.com

The Phoenix Mills Limited

Q4FY24 and FY24 Earnings Conference Call

May 18, 2024

Moderator:Ladies and gentlemen, good day and welcome to the Q4 and FY24 Results Conference Call of The Phoenix Mills Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing "*" then "0" on your touchtone phone. Please note that this conference is being recorded.

Today, we have with us Mr. Shishir Shrivastava - Managing Director, Mr. Kailash Gupta - Group CFO and Mr. Varun Parwal - Group President, Strategy, Internal Audit and Head Corporate Finance. I now hand the conference over to Mr. Shishir Shrivastava. Thank you and over to you sir.

Shishir Shrivastava: Good morning ladies and gentlemen. I take pleasure in welcoming you all to discuss the Operating and Financial Performance for the fourth quarter and year ended March 2024. However, before we proceed, I am very pleased to welcome Mr. Kailash Gupta, as the company's group CFO. Kailash brings over 25 years of experience across various financial disciplines, including business strategy, investor relations, M&A, financial planning and analysis, treasury and taxation to name a few. Most recently, Kailash served as the CFO at Inox Leisure Limited for eight years, leading their financial and commercial operations. He played a key role in the merger of Inox with PVR Limited. Prior to Inox, Kailash held significant positions at Torrent Pharma, Entertainment Network, Thomas Cook, Tata Teleservices and the Aditya Birla Group. Kailash is a qualified Chartered Accountant from the batch of 1995 with a well proven track record. He has received several accolades including the CA CFO Award for Media and Entertainment Industry from the ICAI and was also recognized as one of Asia's 100 Power Leaders in Financed by White Page International. We are confident that his expertise will be instrumental in our continued growth and performance.

I will now take you through the key highlights of the results with reference to the relevant slides of the results presentation. If I may draw your attention to slide #3. Starting off with a quick overview of the retail business. FY24 has been a milestone year for the business. At the start of this financial year, we had set sights on stabilizing the four new malls and driving growth across the

Page 1 of 17

existing operational assets. I am very pleased to report, that we had a strong operating performance across most centers and consumption or retailer sales that our malls for the year closed at Rs.11,344 crore up 23% year-on-year.

Moving on to slide #4. This slide provides a breakup of the performance and highlights the contribution from new malls during FY24. EBITDA from the retail business for the full year came in at Rs. 1,673 crores up 25% year-on-year. Overall existing operational malls saw full year rental income and EBITDA growing at about 6% and 7% respectively and EBITDA margin as a percentage of rental income is at a healthy 104% of rental income.

New malls contributed approximately Rs. 295 crores in rental income and approximately Rs. 257 crores in EBITDA for FY24. EBITDA margin as a percentage of rental income is lower in new malls during the initial period of occupancy ramp up. However, going forward in FY25, EBITDA margins from new malls should start moving towards the margins we see for our existing operational malls as these malls stabilize.

Let's go to slide #5. We are seeing a fast ramp up in trading occupancy at our newly launched malls. Phoenix Citadel, Indore launched in December 2022 crossed 90% occupancy levels within 12 months of launch and has been trading at a stable 91% occupancy since then.

Palladium Ahmedabad launched in February 2023, this is on slide #6, is already trading at 86%. In fact, the multiplex at Ahmedabad is ready and once we obtain the occupation certificate, the multiplex will commence operations and the occupancy level will cross 94%.

Moving on to slide #7, Phoenix Mall of the Millennium at Pune opened in September 2023, and is already trading at 77% occupancy levels within eight months of opening.

And on slide #8, last but not the least, Phoenix Mall of Asia at Bangalore launched in October 2023 and is already at 67% occupancy levels within six months of opening.

Let's take a look at slide #10. As we have noted earlier, total consumption in FY24 was at Rs. 11,344 crores approximately demonstrating a year-on-year growth of 23% over FY23. On a like-to-like basis, consumption in FY24 grew by 8% over FY23 led by strong double-digit growth in Phoenix Market City and Palladium Chennai, Phoenix Market City Mumbai at Kurla and Phoenix

Page 2 of 17

Palassio, Lucknow. Phoenix Palladium reported a growth of 4% but if adjusted for the loss of contribution from the Lifestyle store, its reported consumption growth will be approximately 9% on a like-for-like basis. As you may all be aware, we have shut down that store and demolished that structure as per our revised approval plans to provide a spectacular entry and arrival experience and better circulation for the ever growing iconic Phoenix Palladium development. Gross retail collections for the period were approx. Rs. 2,743 crores up 27% over FY23.

Slide #11, shows total consumption in Q4 FY24 was at approximately Rs. 2,833 crores up 28% year-on-year and on a like-to-like basis grew by 10% over Q4 FY23. This excludes the new malls which were launched in the end of calendar year 23.

Slide #12 provides an overview of the category-wise consumption performance across our malls on a like-to-like basis.

Moving on to slide #13, rental income for the quarter grew by 31% over Q4 FY23. Driven by strong performances from Phoenix MarketCity, Pune, Phoenix MarketCity in Mumbai, Chennai, and Phoenix Palassio, Lucknow. The rental income performance is reflected in the EBITDA performance as well and on slide #14, it demonstrates a growth of 28% over Q4 FY23.

Drawing your attention to slides #15 and #16. Since we have discussed the FY24 retail income and EBITDA performance, I will skip through these slides and go to the occupancy overview across major malls on slide #17. Weighted average leased occupancy across major malls stood at 97% and trading occupancy at 88%.

Moving on to the commercial offices section, which is on slide #18 and onwards. We have taken significant strides towards cementing our presence in this asset class as well.

Slide #19 demonstrates that for FY24 total income from the office business was approximately Rs. 190 crores with an EBITDA of approximately Rs. 110 crores depicting a growth of 12% and 13% respectively over FY23. FY24 gross leasing has been over half a million square feet out of which approximately 3.6 lakh square feet is new leasing and 1.7 lakh square feet is renewal.

Page 3 of 17

Slide number #20, occupancy in our operational portfolio of Mumbai and Pune has increased to 70% at the end of FY24 up from 63% last year while maintaining healthy gross rental levels.

On slides #21 and #22. In line with the performance in FY24 income from the office business in Q4 FY24 was at Rs. 49 crores up 13% compared to the same quarter last year and EBITDA was Rs. 30 crores up 12% over Q4 FY23. We are hopeful to continue this momentum with the launch of best-in-classbenchmark-setting new age commercial office assets at Bangalore, Pune and Chennai in 2024, where we have seen keen interest from prospective clients.

Moving on to slide number #23 and hotel assets. We continue to see positive trends in the hospitality segment with double digit growth in ARRs along with high occupancy levels in both of our operational hotels.

Slide #24 shows that our marquee destination - The St. Regis, Mumbai, we have seen a remarkable ARR level at more than Rs. 21,000 in Q4 FY24. Even for the full year of FY24 there has been a notable increase of 23% in room rates while maintaining above 80% occupancy throughout the year.

Coming to the operational performance, shown on slide #25. St. Regis continues to reach new heights and has clocked a total income of over Rs. 490 crores with EBITDA of approximately Rs. 223 crores, representing an impressive EBITDA margin of 46%.

Slides #26 and #27, moving on to the Courtyard by Marriott at Agra, we have seen double digit ARR growth throughout the year with occupancy levels close to 80%. The operational performance, in FY24, this asset has clocked a total income of Rs. 55 crores with EBITDA of Rs. 16 crores and healthy margins of 29%.

Let's move to the Residential business which is on slide #28 and onwards. We have had another remarkable year during FY24.

Slide #29 and #30 show a strong demand and fast conversion where we have seen gross sales of approximately Rs. 566 crores and we have collected Rs. 646 crores during FY24. Also, we are happy to report that we have received the occupation certificate for Tower 7 at One Bangalore West. Accordingly, on the basis of the sale of the completed inventory and on receipt of OC of Tower 7, we have recognized revenue of Rs. 870 crores for FY24 and Rs. 454 crores during the last quarter.

Page 4 of 17

Moving on to the financial results for the quarter and year ended 31st March 2024. This is on slide #31 and onwards.

Slide #32 shows the standalone P&L which houses Phoenix Palladium, Mumbai and a very small component of offices - Phoenix House. Income from operations for Q4 FY24 and full year FY24 have been slightly lower than Q4 FY23 and full year FY23 as well. Mainly on account of ongoing enhancements to the overall layout, we have vacated and demolished the structure which housed the Lifestyle store previously and that has had an impact both on consumption and on our rental incomes.

Without spending too much time on the standalone balance sheet, we will move on to consolidated performance. On slide number #34, with the addition of new operational assets and momentum in leasing and occupancy, our income from operations for Q4 FY24 is higher by almost 80% compared to Q4 FY23. For the full year of FY24 income from operations is higher by about 50% compared to FY23. I would like to mention at this point that in FY24 we have booked Rs. 870 crores of revenue in our Residential business which has been added to this and this demonstrates a boost in the top line. On our operating EBITDA metrics for the full year FY24 we have reported Rs. 2,185 crores with an increase of 44% over FY23. This momentum has been seen quarter-on- quarter with Q4 FY24 clocking 46% growth in operating EBITDA over Q4 FY23. Profit after tax after adjustment of minority interest and exceptional items which was Rs. 1,152 crores for FY24 grew by over 60% over FY23.

Let's move on to slide number #36. Our consolidated debt as on 31st March 24 is Rs. 4,366 crores with an average cost of roughly 8.8%.

Let's draw your attention to slide #37 and #38. On the consolidated cash flows front, we have crossed the milestone of Rs. 2,000 crores and generated net cash flow from operations of Rs. 2,162 crores net of taxes. We have reinvested a considerable amount of this cash flow through capital expenditure across assets under development and one land acquisition during the year in total aggregating about Rs. 1,670 crores.

Just for perspective, after removing interest paid to service the existing debt our operating free cash flow net of taxes and interest is about Rs. 1,781 crores for FY24 which is 27% higher than last year.

Page 5 of 17

Slide #39 and slide #40, show a group level net debt position has remained close to Rs. 2,200 crores as the majority of our CAPEX has been funded by operational cash flows. PML level net debt position has improved with net debt of Rs.1,560 crores as on 31st March 2024.

Let's move on to slide #41. Last month in April, we acquired 6.6 acres of land adjacent to Phoenix MarketCity Bangalore at a cost of about Rs. 230 crores. This has been acquired through a joint venture with Canada Pension Plan and will add to the overall footprint and development potential accessibility and experience for our destination retail-led mixed use development Phoenix Market City located on Whitefield Road in Bangalore.

On slide #42, we have a clear roadmap of where we intend to be by 2027. We aim to have an operational portfolio of about 14 million square feet of retail, 7 million square feet of offices close to 1,000 keys in hotels and add another million square feet to our Residential development. These are all projects which are already underway, lands have been acquired and we may be under construction or at design development stage. We are busy charting our growth beyond 2027 and have added to our development mix through land acquisitions at Thane and Bangalore. And we continue to evaluate and work on opportunities selectively to add to our growing portfolio.

Moving on to sustainability slides #43 and #44. Sustainability is very important for our company. As we grow we are committed to doing so responsibly and here's how. We are ramping up our use of renewable power across our entire portfolio aiming for over 70%. All our new buildings are targeted to be LEED certified, ensuring they are environmentally friendly and efficient. We are already making strides on this front with 1/3rd of our existing retail buildings, i.e. 1/3rd by GLA are already certified with a USGBC LEED certification.

This brings me to the end of our operational and financial performance update and we can now be open for questions.

Moderator:Thank you very much. We will now begin the question-and-answer session. First question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.

Parikshit Kandpal: Shishir my first question is on the same store growth of 8%. If you can help us understand a little bit more on how has been the trading occupancy impact on this 8% volume growth and inflation?

Page 6 of 17

Shishir Shrivastava: Thanks for your question Parikshit. Let me try and answer it to the best of my abilities. If you look at our operating assets, several of our Phoenix Market Cities continue to be at the lag end of the tenure with anchors. So, for example, Phoenix MarketCity, Bangalore, and Phoenix Market City, Pune both have anchor space, which is about more than 52%. During the cycle of the mall's life, or the tenure of the contracts, we continue to see opportunities to make these malls more efficient. What I mean by that is moving away from being anchor heavy, depending on where you are in the life of that mall, what the customer aspirations are, and bringing in a new brand mix, and perhaps new categories. So, we did this in Phoenix MarketCity, Mumbai, and we have seen a significant, I would say in one - one and a half years, the numbers have played out, and they demonstrate how the strategy has worked for us. So in several of our malls, we are now seeing that opportunity again, in the next year and maybe year and a half. So, that strategy will help boost consumption. So it's always important to refresh the category mix and brand mix. We took some hit at Lower Parel as I mentioned during my opening remarks, with the Lifestyle block, which generated close to Rs. 25 - Rs. 27 crores annual rent and significant consumption, we saw a drop in consumption and rent because the Lifestyle block was vacated and demolished to create a better experience for the ongoing development. We are doing some fantastic work at Phoenix Palladium, Mumbai in expansion. There is a host of new brands that we are in discussion with and these are definitely going to aid in improving both consumption and overall rental income for us. So, I don't think we are seeing any structural issue here, which is causing a consumption to let's say, be at a stable, consistent level or not demonstrate great growth. It's every mall in its life has this opportunity of improvements every three to five years and that's where we are in with several of our malls. So, we are going to see this getting better.

Parikshit Kandpal: And guidance for next year, what kind of things to grow you are looking at?

Shishir Shrivastava: Sorry, Parikshit can you repeat what you are saying?

Parikshit Kandpal: So for these malls which are like operational, like-to-like basis what kind of growth you think we can forecast for FY25 versus 8% you have reported this year?

Shishir Shrivastava: See, I don't think it's fair to talk about FY25 alone. I would say one has to always look at the three year CAGR, three to five year CAGR and over a three

Page 7 of 17

to five year CAGR. I would estimate anywhere between 11% to 12% kind of growth.

Parikshit Kandpal: Okay. Sir my second question is on Thane. So, you have acquired the land parcel so any plans like what have we decided to do there. One of your competitor is coming up with a hotel about 560 odd rooms, keys. So any plans, what are you looking to add there, do there, in terms of you can help us in the mix understand where we commercial, hospitality what you intend to do there?

Shishir Shrivastava: We are not ready to announce what we are doing there yet, because it's still not concluded. So, we are going to take probably another two-three months to perhaps decide. But it's seeming to be a large mixed-use development with a combination of maybe some retail, some hotel, we are trying to really determine if residential is the right way to go, that's where the question really is and what's the best use on this land. So we will be very, very happy to announce as soon as we have taken a decision.

Parikshit Kandpal: Okay. And just last thing on the Residential piece. So now we have said we are increasing our overall developable area there my FY27. So what kind of pre sales number do you think we can achieve on a more consistent and steady basis so that, that portfolio gives more visibility on growth. We didn't have any major launches besides the Bangalore one, Alipore is still awaited. So how do you intend to build that portfolio over the next three four years and what kind of places do you think you can achieve in that segment in three years' time, more on the roadmap of three years, next three years.

Shishir Shrivastava: In Kolkata, we have secured the major approvals, this is going to be about a million square feet of saleable area. We are waiting, we have applied for EC; so we are in the process of getting the approvals. We may be about six to eight months away from launch on this asset. The micro market there seems to be very, very strong and stable. Our primary research is showing rates in that micro market to be in excess of about Rs. 18,000 - Rs.20,000. We have already decided on what the product mix is going to be like in terms of the sizing of the apartments, configuration, etc. We have about Rs. 350 to Rs. 400 crores as our target this year to sell the ready inventory which we have in Bangalore between One Bangalore West & Kessaku. So, that's a great target for us to chase another Rs. 400 crores this year. We have total ready inventory of about Rs. 1,200 crores of which this year we are targeting about Rs. 400 crores, we certainly work harder to deliver more than our target. We have taken some price hikes and the market has also accepted that well. And we are

Page 8 of 17

selling at about Rs. 24,000 per square foot plus plus, compared to Rs. 15,000 per square foot plus plus in 2019. This would be our guidance for FY25 that we are targeting to get about aim to sell about Rs. 400 crores.

Parikshit Kandpal: And more on the longer term like three, four years what kind of sales can this segment do for us like Residential, can we reach that 2000 crore number with addition of more projects over the next two, three years?

Shishir Shrivastava: So currently, we don't have any active plans on expanding on Residential. We are not in any race to become a larger Residential developer. We are being very selective about the opportunities and depending on the value at which we are able to buy land in mature, stable markets where absorption has been consistent, we will continue to look at those opportunities. But I can clarify that today we are not actively looking at any Residential growth, new projects.

Moderator:Thank you very much. The next question is from the line of Praveen Choudhary from Morgan Stanely. Please go ahead.

Praveen Choudhary: Just a quick question for me. Can you talk about the competition in tier one existing cities where you already have malls in terms of are you finding considering how good this business has been, credible competition coming in. And the second question is on tier two cities, the return on invested capital, how are you thinking about it as you are going into newer cities. So far you have obviously achieved that. But are you finding that you may not be, or you need to slow down if the returns are coming slower. How are you thinking about it is the question. Thank you.

Shishir Shrivastava: Thanks Praveen. So, let's talk about tier one cities and competition in tier one cities. See we have seen a significant I would say we continue to see a good growth in our numbers in tier one cities, it's a great business to be in. But it also requires a very large team, a lot of effort. Land has become very expensive and especially in the locations where our malls are, land has become very expensive. So, there are many factors which deter competition. We are conscious of the fact that there can be competition, anybody can come into these markets. So, our focus is on creating such experiential centers, which become dominant consumption centers. And with that approach, we will continue to stay a little ahead of the game here. We don't see other developers building malls around our locations at present in any of the markets where we are and we will continue to innovate, get bigger, better where we are. So, that we are just always established as a dominant center. Your second question

Page 9 of 17