KOCHI: Lulu's India retail and mall business reported a 15.8 per cent increase in consolidated operating income to Rs6,308.2 crore in FY26 from Rs5,448.5 crore a year earlier.
The company is expected to gather further momentum as it embarks on a major expansion of its malls and hypermarkets.
A recent credit assessment projects operating income to increase by 23-25 per cent to Rs7,500-8000 crore in FY27, followed by another 14-16 per cent growth in FY28.
The projected expansion is expected to be driven by the ramp-up of its own retail format stores, opening of new stand-alone hypermarkets and two malls, and continued strength in its leasing business.
The group currently owns and operates seven malls across seven cities, offering a total leasable area of 3.1 million square feet, besides 17 stand-alone hypermarkets across India.
Occupancy across the malls stood at 98.4 per cent as of February 2026, with limited lease expiries over the next 12-18 months expected to help sustain occupancy levels and rental income.
Rs1,000cr capex
To support the next phase of growth, the company plans capital expenditure of Rs900-1000 crore during FY27 and FY28 towards expanding its standalone retail network and developing two new malls.
About Rs500-550 crore of the investment is expected to be incurred during FY27, with the expansion to be funded primarily through borrowings.
The expansion comes alongside a significant debt repayment schedule. The company has scheduled principal repayments of Rs1,347 crore each in FY27 and FY28 and is in advanced discussions to refinance two existing loans with longer-tenure borrowings.
Refinancing
The refinancing is expected to reduce principal repayments in the near term, allowing the company to better align its debt servicing with its expansion programme.
After factoring in the proposed refinancing, debt obligations are expected to be comfortably serviced through operating cash flows. The financing profile is further strengthened by promoter support.
Promoter MA Yusuff Ali has provided Rs1,000 crore of fixed deposits as security to lenders, against which Lulu International Shopping Malls and Lulu India Shopping Malls had availed Rs931 crore under Loan Against Bank's Own Deposit (LABOD) facilities as on March 31, 2026.
The promoters have also extended personal guarantees for the companies' bank borrowings.
While maintaining a strong growth outlook, the assessment notes that the business remains exposed to adverse macroeconomic conditions that could affect tenants' performance. It also points out that debt servicing metrics remain sensitive to changes in interest rates and any material decline in occupancy levels.
