Reviews

In this edition, we have reviewed The Phoenix Mills and Power Grid Corporation of India . We suggest our reader-investors to HOLD in Phoenix Mills and Power Grid Corporation of India.

We had previously recommended The Phoenix Mills in Volume No. 35, Issue No. 02, dated December 23, 2019 – January 6, 2020, under the ‘Cover Story’ segment. The stock was then trading at Rs 773.75. We had recommended the scrip based on the company’s growth potential on account of the increasing demand for office rental space.

On the consolidated financial front, for Q2FY21, Phoenix Mills’ net sales decreased by 48.22 per cent to Rs 214.91 crore from Rs 415.07 crore reported for Q2FY20. The operating profit for Q2FY21 contracted by 53.91 per cent to Rs 106.12 crore from Rs 230.22 crore in Q2FY20. The company reported net loss of Rs 39.99 crore of Q2FY21 whereas it had posted net profit of Rs 64.26 crore in Q2FY20.

The current environment doesn’t provide much support for the growth of the realty sector. But Phoenix Mills along with its subsidiaries, Offbeat Developers (P) Ltd., Graceworks Realty, Leisure (P) Ltd and Vamona Developers (P) Ltd., have jointly signed a nonbinding term sheet with an affiliate of GIC (P) Ltd. for the formation and development of a strategic retail-led mixed use platform. This will allow the company to use the proceeds from the transaction for further opportunities such as of expansion and acquisition of greenfield and brownfield projects and also for operational and distressed malls.

With the increasing number of people steeping out of their homes during the recent festive and sale seasons is a boost for the mall sector. Additionally, Phoenix Mills is one of the strong players in the sector to be able to efficiently run large format malls.

Based on long-term growth potential, we recommend HOLD.

We had previously recommended Power Grid Corporation of India in Volume No. 35, Issue No. 02, dated December 23, 2019 – January 6, 2020, under the ‘Cover Story’ segment. The stock was then trading at Rs188.20.

We had recommended the same on the basis of the increased investments of the company in the renewable energy sector and increasing demand in the power sector. On a consolidated quarterly basis its net sales rose by 5.29 per cent to Rs9,529.68 crore in Q2FY21 from Rs9,051.29 crore in Q2FY20.

The operating profit came in at Rs8,742.73 crore in Q2FY21, surging up 7.53 per cent as compared to Rs8,130.63 crore in Q2FY20. The net profit was up by 20.37 per cent to Rs3,037.62 crore in Q2FY21 as compared to Rs2,523.64 crore in Q2FY20.

On a consolidated annual basis, the net sales grew by 7.66 per cent from Rs35,059.12 crore in FY19 to Rs37,743.54 crores in FY20. The operating profit inched up to Rs33,867.66 crore in FY20 giving a rise of 9.88 per cent as compared to the performance of Rs30,822.74 crore in the previous fiscal year.

The consolidated net profit was also up by 10.09 per cent in FY20 as compared to FY19. A positive growth in the company’s financial performance can be seen post the pandemic’s impact. It also has various projects which will support its growth demand. Currently, power being an essential commodity, the sector can be seen recovering with an optimistic view. Hence, we recommend HOLD.

(Closing price as of Dec 28, 2020)