Nexus Select Trust (NXST) Q1 24/25 earnings summary

Executive summary

• Retail net operating income (NOI) grew 8% year-over-year in Q1 FY2025, supported by strong re-leasing spreads and non-rental income, despite a 2% decline in footfalls and soft consumption growth; performance in line with projections.

• Distribution of INR 3,253 million (INR 2.147 per unit) was announced for Q1 FY2025, representing a 100% payout and aligning with full-year guidance.

• Leasing occupancy rose to 97.4%, with 0.23 million sq ft leased in Q1 and an 18% re-leasing spread; most malls near full occupancy.

• Tenant sales reached INR 30 billion, up 3% year-over-year, with June showing a 6% consumption growth after a weak April-May due to elections, heatwave, and IPL.

• Five-year strategy targets doubling retail portfolio NOI via organic and inorganic growth, aiming for a 16% CAGR.

Financial highlights

• Revenue from operations grew 6% YoY to INR 5,538 million in Q1 FY2025; consolidated net profit was INR 1,395.77 million.

• Net Operating Income (NOI) rose 7-8% YoY to INR 4,127 million; EBITDA increased 8% YoY to INR 3,986 million, with margin expanding by 135bps to 72%.

• Distribution per unit (DPU) for Q1 FY2025 was INR 2.147, with a 100% payout ratio.

• Working capital gain of INR 53 crore in NDCF, with INR 38 crore from opening cash; similar trends expected for the year.

• Variable rental component was 11% of total rentals, down from typical 12-13% due to lower consumption growth.

Outlook and guidance

• On track to achieve FY2025 projections, with expectations of stronger consumption and NOI growth in H2 FY2025, driven by festive season and favorable macro trends.

• Full-year projections and guidance for FY2025 remain unchanged, with targeted distribution per unit of INR 8.7-8.8.

• Five-year plan aims for retail NOI to grow from INR 14.4 billion to INR 31 billion, with organic CAGR of 8.5-9% and additional inorganic growth from acquisitions.

• Acquisition pipeline includes non-binding term sheets for 1.8 million sq ft retail area and ongoing discussions for five additional assets.