Phoenix Mills : September 16 2022 Intimation regarding Credit Rating

'9" THE PHOENIX

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. : L171OOMH1905PLC000200

September 16, 2022
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(s),

Sub: Intimation regarding Rating - Compliance under Regulation 30 of SEBI (Listing

Obligations and Disclosure Requirements) Regulations. 2015

Pursuant to Regulation 30 of the Securities. and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find enclosed rating published on September 15, 2022, by India Ratings and Research Private Limited (a Fitch Group Company), the Credit Rating Agency.

This intimation is also being uploaded on the Company's website at https://www.thephoenixmills.com/investors in compliance with regulation 46(2) of the Listing Regulations.

You are requested to take the aforesaid information on record.

Thanking you,

Yours Faithfully,

For The Phoenix rills Limited

Gajendra�,:/e,,Mewara.,c,l,M--.-- ·

Company Secretary

Encl: As above

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

E-mail: [e-mail] •www.thephoenixmills.com

9/15/22, 7:06 PM

India Ratings and Research: Most Respected Credit Rating and Research Agency India

India Ratings Upgrades The Phoenix Mills to 'IND AA-'; Outlook Stable

Sep 15, 2022 | Real Estate

India Ratings and Research (Ind-Ra) has0upgraded The Phoenix Mills Limited's (TPML) Long-Term Issuer Rating at 'IND AA-' from IND A+. The Outlook is Stable. The instrument-wise rating0actions are as follows:

Instrument Type	Date of	Coupon	Maturity	Size of	Rating/Outlook	Rating
	Issuance	Rate	Date	Issue		Action
				(million)
Term loans	-	-	December	INR7,500	IND AA-/Stable	Upgraded
			2031
Fund-based working capital	-	-	-	INR1,500	IND AA-/Stable/IND	Long term
limits*					A1+	upgraded,
						Short-term
						affirmed
Commercial paper (CP)#	-	-	Up to 360	INR1,000	IND A1+	Affirmed
			days
* Sub-limit of the term loans
# To be carved out from the existing working capital facility; nil outstanding.

Analytical Approach: Ind-Ra continues to take a consolidated view of TPML andits subsidiaries and joint ventures, collectively0referred to as the TPML Group, to arrive at the ratings. This is because all0the subsidiaries and joint ventures operate in the similar line of business, and0most of them share the same brand name and are strategically important for0TPML. However, TPML does not guarantee the debt of its subsidiaries and joint0ventures.

https://www.indiaratings.co.in/pressrelease/59523

1/5

9/15/22, 7:06 PM

India Ratings and Research: Most Respected Credit Rating and Research Agency India

The upgrade reflects a strong0recovery in the TPML Group's operating performance across retail and hotel0portfolio in FY22 and 1QFY23. The operating metrics are likely to0remain strong over the near term, given the strong consumption (mostly above0 pre-pandemic levels) and occupancy/average room rate (ARR) trends witnessed0 across Phoenix malls and hotels, respectively, during April-July02022. Furthermore, over the last few years, TPML has raised equity through0a qualified institutional placement(QIP) issuance and stake dilution in some of0 its assets, leading to a significant improvement in its credit metrics, robust0liquidity and the availability of growth capital.

Key Rating Drivers

Strong Recovery in KPIs across Asset Classes: The upgrade0reflects a strong recovery in consumption across the group's retail portfolio (accounts0for around 70% of the revenue). The retail consumption (excluding consumption0of the asset opened in July 2020) for 1QFY23 surpassed the pre-pandemic levels0and stood at 111% of 1QFY20 consumption on a like-to-like basis. Ind-Ra0 expects the same to remain strong throughout FY23. TPML will continue to reap the benefits of the improving consumption trend as a part of the rentals (around 13%0as of 1QFY23 compared with 10% in 1QFY20) remains tied to consumption/trading0density across malls. TPML also witnessed a significant improvement in occupancy and ARR for the hospitality portfolio (accounts for 15%-17% of0revenue). The occupancy for St. Regis, which accounts for 80%-85% of the0 group's hospitality portfolio, surpassed pre-COVID levels in 1QFY23 at 85% (1QFY20: 82%). TPML's commercial portfolio's occupancy has improved to 70% from 65% over0the last one year (excluding the area which became operational in 1QFY23).

Robust0 Growth Trajectory to Cement the Group's Leadership Position: The consolidated revenue came in at

INR14.8 billion in FY22 (FY21: INR10.7 billion) and the EBITDA at INR7.40billion (INR4.9 billion); Ind-Ra expects them to display a sustainable0improvement over the medium term. Ind-Ra expects the EBITDA to grow by 3x-3.5x over0FY23- FY26 (from a COVID-impacted low base of FY22) as TPML's under-construction0 portfolio becomes operational in a phased manner and the occupancy of the existing0assets ramps up. TPML is in the process of adding a leasable retail space of around06 million square feet (msf); currently operational: around 7msf, leased around 6.75msf)0and a leasable office space of 5.1msf (currently operational: around 2msf,0 leased 1.13msf, including an area operationalised in 1QFY23) over FY23-FY26. The0 expansion at four under-construction malls - one each in Indore (Phoenix0 Citadel), Ahmedabad (Phoenix Palladium), Pune (Phoenix Millenium), and0 Bangalore (Mall of Asia) - is on track (Indore and Ahmedabad to be operational0before FYE23 and the other two before FYE24) and has almost achieved0pre-leasing of 83%, 98%, 73%, 76% respectively. Furthermore, TPML will continue0to look for organic as well value accretive inorganic growth opportunities. The0 timely construction and ramp up of the under-construction malls and office0 remains a key rating sensitivity.

Strong Through-the-cycle0CreditMetrics: The group's credit metrics are likely to remain strong as0the EBITDA from matured assets is highly predictable. 80%-85% of the EBITDA is0through rental assets which are governed by medium- term lease contracts, built-in0rental escalation clauses, the pass-through nature of asset-related costs such0as common area maintenance. Furthermore, the upcoming malls are adequately0pre-leased and thus could ramp up and stabilise swiftly.

The consolidated net leverage recovered0 to 2.5x in FY22 (on the back of equity infusions and a partial recovery in EBITDA) after having deteriorated to 7.8x in FY21 (FY20: 4.2x, FY19: 4x),0because of the adverse impact of the COVID- 19 pandemic. As the core business0(excluding residential real estate) does not have high working capital0requirements and the maintenance capex is low, TPML is likely to have high EBITDA0 to free cash flow conversion (barring growth capex) over the medium term. Most0 of ongoing growth capex is in the platforms run alongside Canada Pension Plan Investment Board (CPPIB) and Government of Singapore Investment Corporation (GIC)0and hence, equity requirements from TPML are likely to be limited to its0shareholding. The agency expects the net leverage (basis external debt) to0thus remain below 3x over the medium term. Any aggressive debt-funded0expansion plan is a key rating monitorable.

Liquidity Indicator -0Adequate: TPML had cash and cash equivalents of INR21.7 billion at end-1QFY23,0 primarily bolstered by a fund raiser of around INR58 billion (including QIP and0equity investments from both CPPIB and GIC; of this, around INR48 billion was0already infused at FYE22 and the balance INR10 billion is yet to be infused)0over the past

https://www.indiaratings.co.in/pressrelease/59523

2/5

9/15/22, 7:06 PM

India Ratings and Research: Most Respected Credit Rating and Research Agency India

24 months. TPML also had unutilised overdraft limits of around INR80 billion at end-1QFY23. Given the on-going expansion with an estimated balance0capex of around INR45 billion, the company is likely to have negative free cash flows over FY23-FY25. Furthermore, the company has a debt repayment of around INR140 billion during the same period. Ind-Ra expects the starting cash/undrawn0 banking limits, along with the funding tie up (bank lines, equity commitments0 from partners and refinancing) will be sufficient to meet the growth capex as0 well as debt servicing requirements. Ind-Ra also draws comfort0 from the comfortable EBITDA visibility, given the contractual nature of the majority of the business.

Large Scale, Diversified Business Model: The TPML Group is the largest mall owner0 in the country with a total operational retail space of 7 million square feet0(msf). It also owns 2.0msf of office space, 4msf of residential floor space and0 two hotels with a total of 588 rooms. The expansion is going to further0 strengthen its leadership position in the domestic market. No single asset0accounts more than one-third of the total EBITDA. During 1QFY23, Phoenix0Palladium, Mumbai accounted for 26% of the EBITDA, while PMC Pune and PMC0 Chennai accounted for 14% each, PMC Bengaluru accounted for 13%, PMC Mumbai0accounted for 10%, and St Regis accounted for 10%. The company has a strong asset quality with favourable location as demonstrated by above 90%0occupancy at all its mature malls and close to 85% occupancy for its flagship0hotel - St. Regis.

Unsold Ready-to-move Residential Inventory Provides Financial Flexibility: 0As of 1QFY23, the company had about INR14 billion of ready-to-move0residential inventory against a consolidated net debt of INR20 billion for the group.0 This is likely to provide additional liquidity back up for the group. During0 1QFY23, TPML booked sales of INR704 million in the residential segment.

Lease Renewal Risk: Lease durations for retails malls tend to be shorter0than those for offices. For most of the malls owned by TPML, 30%-50% of the0leases are due for renewal over FY23-FY25. This creates an uncertainty0regarding successful renewals. However, most of the tenants have historically0renewed their leases with TPML on earlier terms. Ind-Ra does not see a major0long-term downside risk to lease rentals, given the leadership position of TPML0in the Indian markets.

Rating Sensitivities

Positive: The timely completion and ramp up of the0 planned expansion, along with sustained occupancy and lease rent on the0existing portfolio, could lead to a positive rating action.

Negative: Any0 significant drop in the occupancy/rentals and/or delays in the ramp-up of the0 occupancy levels across its under-construction portfolio and/or aggressive debt-funded0 capex, leading to the net leverage rising above 3x on a sustained basis, could0lead to a negative rating action.

ESG Issues

ESG Factors Minimally Relevant to Rating: Unless otherwise disclosed in this0 section, the ESG factors are credit neutral or have only a minimal credit0impact on TPML, due to either their nature or0the way in which they are being managed by the entity. For more0 information on Ind-Ra's ESG Relevance Disclosures, please click here. For answers to0frequently asked questions regarding ESG Relevance Disclosures and their impact0on ratings, please click here.

Company Profile

TPML is India's largest mall owner, with presence0across major metros including Mumbai, Bengaluru, Chennai, Pune and Lucknow. The0company is listed on the BSE Limited and The National Stock Exchange of India0Limited. It has an operational history of more than 100 years.

https://www.indiaratings.co.in/pressrelease/59523

3/5

9/15/22, 7:06 PM	India Ratings and Research: Most Respected Credit Rating and Research Agency India
FINANCIAL SUMMARY
Particulars		FY22	FY21
Revenue (INR million)		14,835	10,733
Operating EBITDA (INR million)		7,339	4,942
EBITDA margin (%)		49.5	46
Interest expense (INR million)		2,945	3,478
Interest coverage (x)		2.6	1.4
Net leverage(x)		2.5	7.7
Source: TPML; Ind-Ra

Solicitation Disclosures

Additional information is available at www.indiaratings.co.in. The ratings above were solicited by, or on behalf of, the issuer, and therefore, India Ratings has been compensated for the provision of the ratings.

Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or security or to undertake any investment strategy with respect to any investment, loan or security or any issuer.

Rating History

Instrument Type	Current Rating/Outlook		Historical Rating/Outlook/Rating Watch
	Rating Type	Rated	Rating	40January		150April 2021	160April 2020	170January
		Limits		2022				2019
		(million)
Issuer rating	Long-term	-	IND AA-/Stable	INDA+/Stable		INDA+/RWN	INDA+/RWN	INDA+/Stable
Term loan	Long-term	INR7,500	IND AA-/Stable	INDA+/Stable		INDA+/RWN	INDA+/RWN	INDA+/Stable
CP	Short-term	INR1000	INDA1+	INDA1+		INDA1+/RWN	INDA1+/RWN	INDA1+

Bank wise Facilities Details

Click here to see the details

Complexity Level of Instruments

Instrument0Type	Complexity Indicators
Term loan	Low
Fund-based working capital limits	Low

https://www.indiaratings.co.in/pressrelease/59523

4/5