Mall Operators Set for Double-Digit Growth Through FY27: Crisil

Mall operators are expected to maintain strong momentum over the next year, with Crisil Ratings projecting revenue growth of 12–14% in the current fiscal and double-digit expansion in FY27 as well. The performance will be supported by higher occupancy, steady rental escalations and the continued ramp-up of malls acquired or commissioned in recent years.

According to Crisil’s assessment of 35 Grade-A malls across major Tier-1 and Tier-2 cities, operators have added around 3 million sq ft of retail space in the past two years. Another 4.5–5 million sq ft is expected to be added across the industry over this fiscal and the next, largely driven by expansion in smaller cities. This should lift annual revenue growth by nearly 400 basis points, the rating agency said.

The rating agency expects occupancy levels--already at 93.5% last fiscal--to rise further and stabilise around 94–95% as operators maximise leasing in recently acquired properties. Improved consumption trends, helped by lower GST rates, benign inflation, and softer interest rates, are also expected to support rental income. Revenue share from consumption, which accounts for 10–15% of mall operators’ earnings, is likely to benefit from higher footfalls.

Several listed mall owners such as Phoenix Mills, Nexus Select Trust REIT, Prestige Estates Projects, and DLF are expected to gain from the favourable environment. These companies have been adding new retail assets, boosting occupancy in existing ones and benefiting from rising tenant demand for quality space.

Crisil noted that operating margins for mall operators will remain healthy, with EBITDA expected to stay around 70%. While debt levels may inch up due to expansion plans, leverage is likely to remain stable at around 3 times, supported by strong cash flows. The agency cautioned, however, that any large debt-funded acquisition could add pressure.

With consumption improving and supply expanding at a measured pace, the sector is positioned for steady, broad-based growth over the medium term.