Buy Brigade Enterprises target of Rs 275: ICICI Direct

ICICI Direct's research report on Brigade Enterprises

Brigade Enterprises (BEL) exhibited a robust operating performance with sales volume growth of 39.4% YoY (8.2% QoQ growth) to 1.08 million sq ft (msf) in Q3FY20. Pre-sales grew 35.4% YoY (14.1% QoQ growth) to Rs 603.5 crore. On the leasing front, BEL leased 0.87 msf of space. On the financial front, revenues de-grew 19.7% YoY to Rs 552.3 crore, on account of lower revenue recognition in residential business at Rs 369.4 crore. EBITDA margins expanded 260 bps YoY to 28.2%. PAT grew 1.0% YoY to Rs 49.4 crore on account of net tax credit of Rs 4.9 crore.

Outlook

BEL is well on track on its growth path. Operational performance has so far been encouraging with strong residential sales seen in 9MFY20 & good lease momentum at WTC Chennai & BTG. With this, BEL is poised to sharply ramp up leasing portfolio to 8.7 msf and residential sales momentum is expected to remain strong. Furthermore, stake dilution in hospitality business (talks in advanced stage) could provide growth capital. Hence, we maintain BUY rating on the stock with a revised target price of Rs 275/share.