Nexus Select Q1 Results Review - Acquisitions, Organic Uptick Key For Medium-Term Growth: ICICI Securities

ICICI Securities Report

Nexus Select Trust real estate investment trust clocked 3% like-to-like consumption growth in Q1 FY25. However, while April–May 2024 saw just 1% YoY growth, June 2024 recorded 6% LTL growth; the REIT manager (manager) expects signs of recovery continuing and a strong rebound in H2 FY25.

In Q1 FY25, despite lower consumption growth, retail net operating income rose 8% YoY to Rs 3.7 billion (flat QoQ) driven by re-leasing spreads of 18%. The manager is on track to achieve its distribution guidance of Rs 8.7–8.8/unit in FY25 (Q1 FY25 distribution per unit of Rs 2.15/unit).

The manager aims to double retail NOI over FY24–29E with an equal split between organic NOI compound annual growth rate of 8.5–9% and the balance from acquisitions.

We downgrade the stock to 'Hold' (from Add) post its 14% rise over the last three months; March 25E discounted cash flow -based target price of Rs 157 unchanged.

Key upside risk: Value-accretive acquisitions and

downside risk: Slowdown in consumption.

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