Buy Phoenix Mills - Retailing @ Discount; Target Price: Rs 231: EMkay

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Phoenix Mills Ltd

Retailing @ Discount

BUY

CMP: Rs 182                                       Target Price: Rs 231

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n     Phoenix Mills (PML) offers a unique blend of stability & upside triggers, with cash generation from High Street Phoenix (HSP) and valuation upsides from ‘Market City’ (MC) projects

n     HSP’s valuations at 77% of CMP, largely mitigate downward price risk. HSP is expected to generate FCF of Rs1.3bn in FY12E with marginal committed cash outflows

n     Pre-leased MOUs across its MC projects give comfort on; 1) Debt servicing ability of the project SPVs and  2) Potential valuation upsides as occupancy picks up

n     Our SOTP TP of Rs231 translates into 1.9x FY12E book value. Revenue visibility and improved financials justify proximity to peak P/BV of 2.1x since mid-2008 crisis