India Ratings and Research has upgraded The Phoenix Mills Limited’s long-term bank loan facilities rating to ‘IND AA+’ from ‘IND AA’, with a Stable Outlook. The agency also affirmed the ‘IND A1+’ rating for the company’s commercial papers. This upgrade reflects the company’s strong credit profile, driven by robust cash generation and moderate net leverage, positioning it favorably for future growth.
The Phoenix Mills Sees Credit Rating Upgrade
The Phoenix Mills Limited (TPML) has received a significant credit rating upgrade from India Ratings and Research (Ind-Ra). The agency has enhanced the long-term rating for TPML’s bank loan facilities to ‘IND AA+’, assigning a Stable Outlook. This move from the previous ‘IND AA’ rating underscores the company’s strengthening financial health and its robust market position. Concurrently, Ind-Ra has affirmed the short-term rating for TPML’s commercial papers at ‘IND A1+’.
Key Drivers for the Upgrade
The upgrade is primarily attributed to Ind-Ra’s expectation of a resilient credit profile for TPML, supported by strong cash generation and moderate net leverage. The company’s operating EBITDA saw a substantial increase to INR26.37 billion in FY26, leading to an improvement in net leverage to 1.57x. Interest coverage also improved to 6.82x. Ind-Ra anticipates that net leverage will remain below 3.0x, despite ongoing development capex and payments related to the ISMDPL acquisition.
Retail and Office Portfolio Performance
The rating rationale also highlights TPML’s strong performance in its retail segment, with consumption increasing by 21% YoY to INR165.87 billion in FY26. Retail rental income grew by 10% YoY, and retail asset EBITDA increased by 12% YoY. Furthermore, the company’s completed office portfolio has expanded to approximately 4.8 million square feet, with rising occupancy expected to bolster annuity cash flows. Office income increased by 44% YoY in 1QFY27.
Diversified Strengths and Future Outlook
Ind-Ra points to TPML’s market leadership, diversified cash flows, and adequate liquidity as key strengths. The ISMDPL buyout is expected to provide immediate access to full cash flows. Planned residential projects also offer additional cash flow support. The company’s ability to manage a large development pipeline and its strong track record in leasing and execution are also noted as positive factors. Despite potential risks from development pipeline and lease renewals, the agency believes TPML is well-positioned for sustained growth.
Source: BSE
