Nexus Select Trust (BOM:543913) kicked off Q1 FY27 with a robust 17% growth in tenant sales, driven by a strategic blend of footfall increases and strong trading density, as revealed during the company’s latest earnings call.
Drivers of Consumption and Rental Growth
CEO Dalip Sehgal detailed that the 17% consumption growth was underpinned by a 5% rise in footfall, while underlying value growth accounted for 12-14%. Looking ahead, the company maintains a sustainable 9-10% Net Operating Income (NOI) growth algorithm. This is supported by 5% annual contracted increases, 2% from mark-to-market renewals, and additional contributions from revenue shares and non-retail assets like hotels and offices.
Category Performance and Portfolio Dynamics
When excluding jewelry, consumption growth stood at 14%, and further excluding electronics brought the figure to 11-12%. Pratik Dantara, Chief Investor Relations Officer, noted that this double-digit momentum has persisted into July.
The contribution by category remains diverse:
- Fashion: Remains the primary driver, accounting for ~50% of sales.
- Electronics: Up 24%, representing ~16% of sales.
- Jewelry: Notable growth exceeding 50%, contributing ~7%.
- Entertainment: Grew 16%, making up ~6% of sales.
- F&B: Contributes ~10% to the total.
Hypermarkets, meanwhile, are being strategically reduced within the portfolio, showing flat or low single-digit performance.
Regional Success and Expansion Plans
The Northern portfolio emerged as a standout performer, with Select City recording growth exceeding 20%. Regional malls in Amritsar and Udaipur also outperformed the portfolio average. Regarding expansion, the company’s eight-asset pipeline remains active. The acquisition of Diamond Plaza in Kolkata is slated to close within 30 days, with one or two additional eastern India acquisitions expected to be signed within the next 60-90 days.
Financial Outlook and Distribution Guidance
While consumption trends remain strong, management is maintaining current full-year guidance, opting to wait for Q2 results before considering any revisions. Despite the gap between the 17% consumption growth and 10% retail NOI growth, leadership remains optimistic. Dantara explained that this variance stems from the onboarding of premium brands—which currently operate on lower revenue share arrangements—and a leasing philosophy that allows retailers room to grow before capturing higher rental shares.
Current distribution guidance for FY27 remains steady at INR 9.5-10 per unit. As the company continues to target a revenue share ratio of 13-14% through strategic lease renewals, management expects the gap between consumption and NOI growth to narrow over time.
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