Nexus Select Trust Q4 Results Review - Growth Story On Track: ICICI Securities

ICICI Securities Report

Nexus real estate investment trust clocked 9% like-to-like consumption growth across its urban consumption centres (malls) in Q4 FY24 which resulted in retail net operating income of Rs 3.7 billion.

With 98% retail occupancy as of March 2024 and the portfolio having an estimated 20% mark-to-market potential, the focus will be on higher rentals going forward with occupancy at optimal levels.

We expect Nexus to clock NOI CAGR of 10.4% over FY24-26E on likely ramp-up in occupancies of existing assets, annual rental escalations and mark-up of expiring leases.

We retain our Add rating with a revised March-25E DCF-based target price of Rs 146/share (earlier Rs 141 on Mar’24E discounted cash flow).

At current market price of Rs 133, we expect Nexus REIT to deliver net distributable cash flow distribution yield of 6.4% in FY25E and 6.8% in FY26E.

Key risks: Slowdown in consumption / fall in occupancies and rentals.

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