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ICICI Securities Report
Mindspace Business Parks real estate investment trust delivered a steady performance in Q2 FY24 with both revenue and net operating income increasing 7% QoQ to Rs 6.0 billion and Rs 4.9 billion, respectively.
Overall portfolio occupancy as of September 2023 was at 83.8% (decline of 310 basis points QoQ) owing to fresh exits of 0.3 million square feet and acquisition of Porur, Chennai asset of 0.24 msf which has higher vacancy.
Any positive developments in H2 FY24 on special economic zone floor-wise denotification is a key monitorable.
We retain our 'Buy' rating with an unchanged discounted cash flow based target price of Rs 366/unit based on March-24E net asset value.
At current market price of Rs 309/unit, we estimate Mindspace's net distributable cash flow yield of 6.2% in FY24E and 6.9% in FY25E, of which over 90% is estimated to consist of tax-free dividends.
Key risks to our call are further rise in vacancies across assets and fall in lease rentals.
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