Mall operator The Phoenix Mills Ltd saw retail consumption grow 13% year-on-year in the September quarter (Q2FY26) and 12% year-on-year in the first half of FY26, its operational update showed. The reading was broadly in line with analysts’ expectations.
Despite heavy monsoons in several cities, Q2 was sequentially better owing to traction in newer malls such as Phoenix Citadel (Indore), Palladium Ahmedabad, Mall of the Millennium (Pune) and Mall of Asia (Bengaluru). The older MarketCity malls in Pune and Bengaluru are undergoing tenant churn and lease restructuring, which could temper near-term growth prospects. While consumption growth at older malls was flat year-on-year in Q2FY26, trading densities grew in the double digits. ‘Trading density’ in the retail sector is the sales per square foot of mall space.
Key metric remains muted
But this is hardly comforting. According to IIFL Securities estimates, rental growth, a key re-rating driver, remained modest around 3.5% year-on-year in H1FY26, implying limited scope for a sharp recovery just yet. To be sure, Q1FY26 rental growth was at 4%.
The gap between consumption growth and rental income growth could continue in the near term, given the tenant churn. In its October 10 report, Nomura Global Markets Research warned of slower consumption growth in H2FY26 versus H1FY26 owing to a higher base. Also, visibility on rental income growth bottoming out remains low, the report added.
In the commercial portfolio, Phoenix leased 0.7 million sq ft (msf) of office space in H1, lifting occupancy in Mumbai and Pune to 76% from 67% in March. The residential segment gained traction, with Q2 sales rising more than five-fold year-on-year to ₹139 crore and collections doubling to ₹115 crore. In the hospitality business, The St. Regis Mumbai maintained 85% occupancy, flat year-on-year, with average room rates at ₹17,711, up 2% in Q2FY26. The modest increase reflects the high base last year, which included a one-off event.
Phoenix plans to almost double its portfolio by FY30 through projects in Coimbatore and Mohali, and an expansion at Palladium Mumbai. Its office portfolio is set to rise nearly four-fold to 7.1 msf by FY27, while new hotels, including the 400-key Grand Hyatt Bengaluru, will lift hospitality capacity.
Meanwhile, the stock’s performance has been unexciting, up merely 5% so far this calendar year. However, valuations are rich at 44 times estimated FY27 estimated, showed Bloomberg data. The December quarter (Q3) will be closely watched for signs of how the GST cut shapes consumption in what is typically the company’s strongest three-month period. With expectations already high, any festive miss could quickly temper sentiment.
