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ICICI Securities Report
Nexus Select real estate investment trust clocked 13% like-to-like consumption growth across its urban consumption centres (malls) in FY24 which resulted in FY24 consumption worth Rs 120.0 billion. This translated to FY24 net operating income of Rs 16.1 billion.
With 98% retail occupancy as of March-24 and the REIT manager guiding for 9% NOI growth in FY25, we expect Nexus to clock NOI CAGR of 10.4% over FY24- 26E on expected ramp-up in occupancies in existing assets, annual rental escalations and mark-up of leases that are expiring.
We retain our Add rating with a revised March-25E discounted cash flow-based target price of Rs 157/share (earlier Rs 146) valuing assets at 6.5% cap rate versus 7% earlier considering potential value accretion from right of first offer assets.
At current market price of Rs 147, we expect Nexus REIT to deliver NDCF distribution yield of 5.8% in FY25E and 6.1% in FY26E.
Key risks: Slowdown in consumption / fall in occupancies and rentals.
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