Ladies and gentlemen, good day and welcome to the Q3 and 9-month FY 2025 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. Management of the company is being represented by Mr. Shishir Srivastava, Managing Director, Mr. Kailash Gupta, Group CFO, and Mr. Varun Parwal, Group President, Strategy, Audit, and Head, Corporate Finance. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. At this time, I would like to hand the conference over to Mr. Shishir Srivastava. Thank you, and over to you, sir.
Thank you, Michelle. Good morning, everyone. We take pleasure in welcoming you all to discuss the operating and financial performance for the third quarter and nine months ended December 2024. It's our privilege to share yet another strong quarter of growth and success with you. Our Q3 FY 2025 results reflect our unwavering commitment to delivering sustained value for all our stakeholders. I hope you've had a chance to look at the results presentation shared by us. The same is uploaded on the stock exchanges as well as our corporate website. I will now take you through the key highlights of the results. Let us start with an overview of our performance on a consolidated level. In Q3 FY 2025, our core businesses, that is, retail, offices, and hotels, achieved an operating revenue of INR 927 crore, and EBITDA for the quarter was at INR 561 crore.
We had strong performances across our core operating businesses, which reflected in revenue growth of 14% year-on-year and EBITDA growth of 21% year-on-year. To provide a more accurate picture of our core business performance, we have adjusted the figures to exclude the contributions from the residential and non-core businesses, which are inherently variable in nature. For nine months FY 2025, operating revenue from our core businesses stood at INR 2,613 crore, up 19% versus nine months FY 2024. EBITDA for the nine months from our core businesses was at INR 1,601 crore, up 21% versus nine months FY 2024. For the group at a consolidated level, revenue from operations for nine months FY 2025 stood at INR 2,797 crore, which is a 5% increase year-on-year, and EBITDA was at INR 1,602 crore, up 3% versus nine months FY 2024. Moving on to our Retail business performance, first up is the expansion update on the expansion of Phoenix Palladium Mumbai.
I'm pleased to announce the completion of a significant expansion at Phoenix Palladium Mumbai, adding approximately 250,000 sq ft of gross leasable area. This expansion aims to offer an unparalleled retail experience with five levels of curated retail offerings, a diverse selection of distinguished F&B outlets, and an elevated dining experience. Planned additions include entertainment options such as a pickleball and padel court, and an indoor gaming and entertainment hub. In November 24, we celebrated the grand opening of this new annex building with the launch of South Mumbai's first and Mumbai's largest Uniqlo store. This was followed by the opening of Celio's flagship store and Lifestyle, along with other retailers including ECCO, Gap, Sephora, Dessange, and Nykaa Luxe, and more launches expected in the coming months.
We have created a two-level F&B village featuring over 18 dining venues, several which are currently under fit-out, and a large entertainment hub under fit-out with Game Palacio, which will further enrich the center's offering. Moving on to our operational highlights, retail consumption surged to over INR 4,000 crore in Q3 FY 2025, marking a robust 21% year-on-year growth. This reflects the continued strength of discretionary spending and the resilience of our premium retail assets. We witnessed a significant revival in consumption during this festive season, with strong growth at several of our properties, including Phoenix Marketcity, Pune, which reported an 11% increase, and Phoenix Palassio, Lucknow, which saw a 19% increase. Of course, the recently launched properties at Indore, Ahmedabad, Pune, and Bangalore continue with their strong operating trends.
Across the portfolio, jewelry emerged as the top-performing category this quarter, with a growth of 26%, followed by FEC and Multiplex, showing a 16% growth. Fashion and accessories showed a growth of 13%. In this last quarter, we saw unseasonal heavy rains in Bangalore and Chennai, which impacted consumption. It is our estimate that our overall consumption would have been higher by about 1.5%, approximating about INR 55-INR 60 crore in Q3 FY 2025, had we not seen this unusual weather change. Retail rental income stood at INR 505 crore, up 12% year-on-year, and retail EBITDA for the quarter came in at INR 500 crore as well, INR 505 crore as well, up 15%. Consumption reached INR 10,500 crore during the first nine months of this fiscal year, up 23% year-on-year. This compares favorably to the total consumption of INR 11,300 crore achieved in the entirety of FY 2024.
We saw strong uptick in consumption during the quarter, and this positive momentum has continued in January as well. Retail rentals for the first nine months of FY 2025 exhibited a 21% year-on-year growth, reaching about INR 1,470 crore. Concurrently, EBITDA for this period was up by 22% year-on-year at about INR 1,511 crore. Trading occupancy continues to build a strong momentum, reaching 91% in December 2024, up 87% from March. Our newly launched malls are ramping up at an impressive pace, contributing significantly to this growth. Phoenix Palladium Ahmedabad achieved a strong trading occupancy level of 97% in December 2024. Phoenix Mall of the Millennium, Pune, has reached a trading occupancy of 91%, and Phoenix Mall of Asia touched a trading occupancy of 81% in December 2024.
Moving on to the Office business, as of December 2024, occupancy across our operational office assets in Mumbai and Pune stood at 70%, with average rent at around INR 112 per sq ft. During the nine months FY 2025, we completed leasing of about 1.75 lakh sq ft in the currently operational offices. During the quarter, our commercial office income grew by 7% to INR 53 crore, and EBITDA was at INR 33 crore, which was up by 17%. For nine months FY 2025, income was recorded at INR 158 crore, up 12%, and EBITDA grew by 22% to INR 98 crore. Income and EBITDA growth primarily resulted from increased license fees due to higher billing from new leases and rental escalations, coupled with improved cost control measures.
We are pleased to announce that Phoenix Asia Towers, Bangalore, has received the occupation certificate and will see our clients who are currently under fit-out commencing operations from their fantastic offices soon. Pre-leasing activities have commenced for Phoenix Asia Towers, Bangalore, and Phoenix Millennium Towers. We've cumulatively leased about 110,000 sq ft across these assets. We still await the completion of Millennium Towers, Pune, post which we expect the leasing velocity to accelerate. Looking ahead, we also anticipate the completion of One National Park, our offices in Chennai, during 2025. Our office developments in Pune, Bangalore, and Chennai will take our total commercial office portfolio to nearly 5 million sq ft. Moving on to our hotels, a key element of our strategy this year has been a deliberate focus on optimizing the ADRs, even if it meant potentially moderating occupancy levels.
This strategy has proven particularly successful with our flagship property, the St. Regis Hotel, Mumbai. Our flagship hotel, the St. Regis, continues to lead the market, achieving a stellar 11% increase in ADR at about INR 22,343. This reinforces our pricing power and the premium positioning of our hotel. During Q3 FY 2025, we achieved an impressive 11% increase in ADRs while maintaining a healthy occupancy rate of 84%, a marginal 2% improvement. For the nine months FY 2025, ARR and RevPAR at the St. Regis, Mumbai grew by 9% and 13%, respectively. Income for Q3 FY 2025 across the portfolio at St. Regis, Mumbai was INR 148 crore, with an EBITDA of INR 72 crore, representing healthy EBITDA margins at about 49%. The Courtyard by Marriott Agra has delivered excellent performance with occupancy at 83% and a strong 21% growth in ARR, which again reflects the sustained recovery in domestic and inbound tourism.
Revenue from F&B and banqueting saw a strong growth of 13% during the quarter, supported by the growth in RevPAR and F&B. Total income for Q3 FY 2025 grew by 16% to INR 20 crore, with a strong EBITDA margin of 37% at the Courtyard by Marriott Agra. A quick snapshot about our residential vertical. For the nine months FY 2025, our Residential business achieved gross sales of INR 135 crore and collections of INR 165 crore. The average sales price across our two residential assets, One Bangalore West and Kessaku in Bangalore, is approximately INR 26,100 per sq ft. We currently have about 380,000 sq ft of ready inventory, which we expect to sell in these two projects in the coming years. This brings me to the end of the operational update of our businesses, and I would now like to request Kailash, our group CFO, to take you through the financial performance.
Thank you, Shishir, and good morning, everyone. Let us begin with the financial performance of our standalone businesses first. The P&L on a standalone basis, which is only the, I mean, Phoenix Palladium and some small properties as an office component. For Q3 FY 2025, income from operations touched INR 127 crore, a 6% increase over the same period last year. EBITDA for the quarter stood at INR 81 crore, increased by 5% at a margin of 64%. Going to the consolidated businesses, consolidated revenue from operation for Q3 FY 2025 was at INR 975 crore, with an EBITDA of INR 553 crore. For the nine months ended December 24, consolidated revenue was at INR 2,797 crore, up by 5%, and EBITDA was at INR 1,602 crore. Our core businesses, retail, office, and hotel, have generated INR 1,601 crore. So almost 100% of the profit is coming primarily from the three businesses.
On the cash flow, let me update you on the cash flow, CapEx, liquidity, and debt part. The net cash generated from operational activities for FY 2025, for nine months FY 2025, was INR 1,506 crore, and for Q3, it was INR 506 crore. To provide further context, after adjusting for interest and taxes paid, I'm excluding, of course, the residential business, the operating cash flow was INR 380 crore, up 12% for the quarter three FY 2024. Capital expenditure for nine months FY 2025 was at INR 1,758 crore, which includes acquisition of three assets, mainly the Mittal land, Coimbatore, and Chandigarh. Total amount is INR 965 crore, and the total construction cost is around INR 793 crore. As of December 24, the liquidity position, so total cash was available for the future, is INR 2,074 crore. Compared to March 2024, our group level gross debt increased marginally by INR 25 crore and stood at INR 4,391, so INR 4,391 crore.
Our group level net debt position post the cash reduction is around INR 2,317 crore as of December 2024. We reduced our average cost of borrowing to 8.64%, which is around 25 basis points reduction as compared to the last year. And we remain committed to the future optimization of our debt cost, so we continue to churn our debt portfolio based on the availability. To secure our long-term growth, we have strategically acquired six land parcels, totaling around 53 acres over the past two years, and we have now pipeline visibility up to the 2030. Our strong balance sheet remains a cornerstone of our growth strategy, with a net debt to EBITDA ratio at just 1.1 and provides ample headroom for strategic expansion. Our growth trajectory remains strong and well-defined, with a plan to double our operational annual portfolio by 2030.
We are systematically executing on our pipeline, ensuring long-term value creation for key stakeholders. Leveraging our strong balance sheet, we are committed to deliver our under-construction projects on time and deploying capital judiciously to expand our portfolio. This brings me to the end of the financial performance update and the liquidity position. We can now start with the Q&A session. Thank you.
Thank you very much, sir. We will now begin with the question and answer session. Anyone who wishes to ask questions may press star and one on the touch-tone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants, I request you to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Puneet from HSBC. Please go ahead.
Yeah, thank you so much and good morning. My first question is, if you can talk a bit about the non-retail part of the business. There seems to be a bit of slowness in commercial leasing on the residential sales, especially given the environment. Can you talk about what you're doing to accelerate those sales and leasing?
Hi, Puneet. This is Shishir. Thank you for your very relevant, pertinent question. Let me talk a little bit about the offices first. Across the country, we are seeing the demand to grow for office-based leasing. In Bangalore, as I mentioned earlier in my communication, we have just recently received the occupation certificate, and we now see a lot of interest going up there. Also, I want to talk a little bit about course correction. While we were building all of these offices, we came to realize that it was very important to get the front office Grade A, best-in-class positioning right, and in that context, we have now gone and created some significant experiences at the office.
The amenities that we have created, executive lounges, meeting room facilities, flex spaces for our occupants over there, fantastic F&B options within the office development itself, including cafes, gym, I would say, community spaces. All of these were part of the course correction that we did when we started looking at what competition was all about, and in the market of Pune and Bangalore, we realized that the competition was all focused on IT and ITS spaces, and for us to create a niche and carve out and attract the right clientele, it was important to get this positioning and the amenities and the entire building specs upgraded. We commenced this enhancement about six months ago, and we have now nearly completed it. Very interestingly, we have recently got H&M's India head office signed up for space at Phoenix Asia Towers, Bangalore.
We’ve got some very good clientele lined up now. I think we are going to see the benefits of all of this in the coming three quarters, and we are going to see a very, very promising leasing velocity going forward. We’ve done the same course correction at Millennium Towers, Pune as well, and we’re very, very excited to see that this building has pretty much turned out to be the best-in-class new benchmark-setting asset for that city. As I mentioned earlier, it’s all about creating the right experiences. We’ve learned the value of this enhancement and the creation of significant revenue at St. Regis in our malls, and we are taking those learnings and duplicating them across our office assets, across the portfolio. Moving on to residential, Puneeth, we have an inventory at the current pricing of approximately INR 1,000 crore.
We are gearing up to expand that development with Tower 8, also getting launched perhaps in this sometime in the next financial year. We are very keen not to dilute the positioning. I guess your question is more about how does one accelerate the sales velocity.
That's true, yeah.
The trade is you drop pricing, you get a higher sales velocity. For INR 1,000 crore inventory in our books, we want to maintain that premium positioning and pricing. We want to straight through to the product. We do not want to disappoint the buyers who already have occupied spaces there, and we want to set right the positioning for Tower 8, which will get launched in the next fiscal year. So we are not seeing the benefit of dropping pricing to improve sales velocity.
Understood. That's helpful. And from the numbers, at least, it looked like the net sales were actually negative. So are we worried about the cancellation or those are some routine ones?
No, no, no. This is just, it's more of a timing issue. I just want to point out one more bring up one more point for you to understand. In 2018, our pricing was roughly at about INR 15,000-INR 16,000, and as a conscious call, we have decided to inch it up. As I mentioned earlier in my communication, we are currently at about INR 23,100 or thereabouts per sq ft is the current pricing, and we've really inched it forward. We've set a new benchmark. I think it's amongst the highest pricing in that micro market or across the city, in fact. We strongly believe in the strategy, and we know that it will pan out well in the long run for us.
Okay. Got it. And the second part is on the retail side, right? I mean, I guess a year and a half back, you had said that retail's consumption showed on the same stores, which has grown between high single digit to low double digits. When are we likely to see that? And what needs to be done for your existing pre-2020 portfolio? Any reshops required there?
Yeah. So I think in the older malls, it's again, I want to go back a little bit into history, and let's look at the period of 2017, 2018, and 2019.
Correct.
Across the same portfolio of assets, which you are talking about, the earlier, older portfolio, in that period of two to two and a half years, we had seen consumption kind of plateau. And this is cyclical, in our opinion. When I say cyclical, it's not economic cycle. It's cyclical because brands kind of need to be enhanced. The product needs to be enhanced. And in 2018, 2019, we took up the significant exercise of premiumization, category upgradation, bringing more bridge-to-luxury brands in. And in the subsequent years, three, four, five years, we have seen how consumption has grown. So we are now again at that same point where all of these assets, we need to be working on premiumization, category upgradation, and, of course, optimizing the store size, introducing newer brands. We are very excited about Bershka opening up at Phoenix Palladium.
I think it's completely a new brand for this market, and it's a much-anticipated brand by our consumers. I would say it's the same strategy. Our teams are working on it. We have a lot of confidence on how this is panning out from our ongoing discussions with retailers. I think just let's look at the performance of Mall of Asia and Mall of the Millennium, where we've created more efficient layouts and optimized store sites to accommodate new brands. We've given more space to performing retailers. There are newer categories that have come in. F&B, we've increased the allocation of area. We've brought in more fine dining, cafes, bars, F&B densification on multiple floors, creating that whole F&B village or Eclectic Village at Pune.
We've seen how strong the performance is now at family entertainment centers, and now we have multiple FECs across the location, creating these indoor social venues, adding smaller but high-density trading stores like watches, cosmetics, electronics. So this is a strategy that we have, and it was something which is in execution, and it's very routine to our business. You are going to see in the retail space, in any mall, there is going to be a plateau every, let's say, five to six, five to seven years in consumption, and you have to take all of these steps for consumption to grow and take it to the next level.
Understood. That's very helpful. And thirdly, anything more in terms of pipeline for new business development? And when should we expect start of work in Thane, Coimbatore, and Kolkata residential launch? Last two from my side.
Okay. So clearly, this has been a significant year for us, which we've really committed to growing the retail portfolio and the retail office, hotel, and even the residential portfolio, right? So for now, our plans indicate that Thane is going to see a retail GLA of about 1.3 million sq ft. Plus, we have additional FSI of another 2.5 million sq ft, and we are currently working on the plans to identify what is going to be the best asset classes to develop over and above the mall. Similarly, at Chandigarh, our mall is.
When do you start building this Thane Mall?
I beg your pardon?
When do you start work on Thane Mall?
We're currently in the stage of approvals, etc., and we hope that during this calendar year, we will be able to break ground.
Oh, nice. Okay.
And get all our approvals in place. Unlike earlier, Puneet, we now go to the very last detail on all design development before we break ground because we see once you break ground and efficiently and quickly build it out. I think that's the most prudent way to allocate capital and see the best returns. Continuing on, Chandigarh is going to be another 1.3 million sq ft mall, and again, we have additional FSI potential over and above, which is unlimited, so we are looking at perhaps a fantastic hotel over there as part of the mixed-use development. Coimbatore is going to be again 1 million sq ft of mall space. We have at our Phoenix Market City location, as part of that mixed-use development in Bangalore, we have already planned the expansion of about 600,000 sq ft, and that construction is ongoing.
So it's been a significant year for us in terms of acquisitions, and we continue to evaluate opportunities. As I mentioned, as I've always mentioned to you and our other investors and shareholders and analysts, we expect to launch at least a million sq ft each year from 2027 onwards as well, and we are well on to deliver on that pipeline that we had anticipated by FY 2030.
Understood. Very helpful. Thank you so much and all the best.
Also, you had a question on the residential in Kolkata?
Yes.
So One Belvedere is the product. That's the name of our product. We expect to launch it towards the middle or end of Q1 of FY 26, and the work is commencing over there already.
Got it. Thank you so much.
Thank you. Participants, you may please press star and one to ask questions. We'll take the next question from the line of Biplab Debbarma from Antique Stock Broking. Please go ahead.
Good morning, Shishir and team. First question is on the ratio I calculate normally the rental income divided by the consumption of a mall portfolio. Typically, it is 14%-15%, but this quarter, it was around 12.7%. Just trying to understand, should we read anything into this, or does it indicate that we'll see rental income growth for the ratio to reach to 15%?
So this is a great thing. It's a significant opportunity for us, Biplab, and I'm glad you asked this question. In any good, well-performing mall where you're seeing, let's say, INR 1,200,000+ of consumption annually, at an average, the retailer's ability to pay rent is in the range of about 15%-16%, considering that their costs remain pretty much fixed and their margins continue to improve as consumption reaches that INR 1,000 crore. So there is a significant opportunity, and we don't need to do anything to take our rental income up. It's just a trailing effect. You will first see consumption growth, and then in the subsequent quarters, you will start seeing rental growth.
Sir Biplab Debbarma has rejoined the queue.
Huh?
Please proceed.
Yeah. Sir, the second question is on the new Palladium area, the expansion area. So has it been fully leased, and by when should we expect the numbers from this new Palladium area? Yeah. It's about 90% leased. We are holding on to some space because, as the retailers commence their operations there, there is the opportunity to extract premium rentals from the last remaining space. There is more than enough demand for us to reach 100% very as soon as we decide. But the effect of this, you're going to start seeing perhaps from this first quarter of the next financial year. It's very exciting because it's been very, very well received. A brand like Uniqlo, when they opened up over there, we had underwritten our rental model on a sale or consumption of about INR 8-10 crore or thereabouts.
In December, the consumption was hovering close to INR 20 crore out of that one single store, which is unheard of from any anchor. So we are very excited about the future and the potential of the Phoenix Palladium expansion, which is about 250,000 sq ft. And also, the product is incredible, what we are creating there. The two-level F&B village is going to really become the hub for leisure, entertainment, and F&B, which sits over and above all the retail that we've created there.
My final question is on the, we have been reading, slowdown in urban consumption everywhere. There is some kind of negativity. How do you, Sir, see consumption in the next, say, one year? Can you give us your thought on that?
If we go by how January has panned out for us, it's been extraordinary across the portfolio. I can't crystallize on how the consumption will be for the rest of the year, but we are very, very confident that we're going to continue to see significant growth in consumption. That's not just coming out of natural. I mean, it's organic, but it also requires we are putting in efforts on introducing new intellectual property and marketing events to boost consumption. For example, the Black Friday sales at the end of November, which was a three-day event, this was an important factor this year in reviving consumption growth in the lean period, which comes between Diwali and end-of-season sales in December. We identify these dips in consumption, and we curate experiential events which boost consumption during that period.
This is something that we work very closely with all the brands to make it very, very successful.
Okay, Sir. Thank you, Sir, and all the best.
Thank you.
Thank you.