Accumulate Brigade Enterprises; target of Rs 537: Geojit

Geojit recommended accumulate rating on Brigade Enterprises with a target price of Rs 537 in its research report dated March 28, 2023.

Broker Research

March 28, 2023 / 18:25 IST

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Geojit's research report on Brigade Enterprises

The Brigade Group is one of India’s leading property developers, with over three and a half decades of expertise. The company has developed many landmark buildings and transformed the skylines of cities across South India. Since its inception, Brigade has completed 250+ buildings, amounting to over 76 million sq. ft. of developed space across a diverse real estate portfolio. Pre-sales grew by 25% YoY to ~4 msf with a value of Rs. 2,619 cr (+31% YoY) for 9MFY23. We expect the momentum to continue, aided by a healthy pipeline. The average realization has grown at 6% CAGR for the last 3 years. The current realization is Rs. 6,599/sqft, but dropped 1.2% QoQ due to plotted development pre-sales. The realization is expected to impact the next few quarters. Robust leasing segment with 7.2msf (+19% YoY) of leased space. Active pipeline of ~1.4 msf. At full occupancy, the annual exit rental for current lease assets will be ~Rs. 800 cr. Hospitality revenue increased 61% YoY to Rs. 101 cr for Q3FY23. EBITDA increased to Rs. 21.1 cr (+17.9% YoY). In Q3 FY23, Average Revenue per Room (ARR) increased by 58% YoY, while occupancy increased by 14%. We have a positive view on Brigade on the back of a robust residential pipeline (9msf), Healthy cash flows, and the revived hospitality segment. But a rising mortgage rate for a longer period can be a headwind.

Outlook

Hence, we assign Accumulate rating to the stock with a target price of Rs. 537 based on SOTP valuation.

For all recommendations report, click here