I recently bought Phoenix Mills - a real estate company. Phoenix mill mall in Lower Parel is the biggest mall in Mumbai south of Bandra, and is becoming even bigger as new commercial space gets ready for occupancy over next 2 years. The value of just this mall is probably more than the market value of the entire company today - depending on the cap rate used. About 250 crore annual rent from the mall when completely developed in FY11, while the current market cap of the entire company is 1900 crore. Company has very little debt - though one can always doubt the veracity of a real estate management team in India. Considering the way the population of Mumbai is growing, and the time it takes to develop a mall here, I think it is a very long time before any serious competition to this mall emerges in the location where it operates.
So the other malls and hotels that Phoenix mill is developing and has already sunk capital into (including the other one in Kurla in Mumbai) are not being ascribed much value right now.
I like this statement by Atul Ruia (director of Phoenix Mills) in this interview with Mint earlier this year: "You raise capital in good times and build in the bad". Phoenix mills raised 980 crore through a QIP in Aug 2007. It is one of the few developers that hasn't yet diluted shareholders this year after stock fell 80% from their peak - unlike a DLF or Unitech.
The risk with this stock is - it is a real estate stock. In any market correction, real estate will fall the hardest, and this stock will fall accordingly. I have bought it with an intention of not looking at it till 2011.
Disclosure: Long Phoenix Mills