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Brigade Enterprises - In-line performance - HDFC Securities

Posted On: 2021-08-09 17:31:48 (Time Zone: UTC)

Mr. Parikshit D Kandpal, CFA, HDFC Securities and Mr. Chintan Parikh, Institutional Research Analyst, HDFC Securities

BRGD reported presales of 0.76msf (+82%/-54% YoY/QoQ) for a value of INR 4.8bn (+82%/+92% YoY/QoQ). Collection of INR 5.3bn in residential business (vs INR 8.4bn in Q4FY21) was second highest ever. Collection in the commercial portfolio continued to be healthy at 99%. While Retail consumption reached 90% of the pre-COVID level, hospitality GOP margin reported loss at -14% from +22% QoQ. Despite the mid-term challenges in hospitality and retail business, we maintain ADD with an increased TP of INR 357 (vs INR 296 earlier, roll forward to Jun-23E), given the strong momentum in residential business. We have increased our FY22/23 estimates to account for higher price realisation, recovery in retail, improving lease momentum, and lower losses for hospitality business.

Q1FY22 financial highlights: BRGD reported revenue/EBITDA of INR 3.8/1.1bn respectively for the quarter, 9/11% beat to the estimates. An exceptional loss of INR 209mn was reported for the balance stamp duty payable on merger of BREPPL with BPPL. Adjusting for this, APAT comes to INR -192mn, 16% beat to the estimated loss.

New projects seeing better pricing up 0-5% YoY; reoccupancy to drive leasing: BRGD registered presales volume/value at 0.76msf/INR 4.8bn for the quarter, up +82/+92% YoY, with average realisation up 5% YoY, owing to product mix and price hike. Of this presales, 38-40% value contribution came from launches, which were at 1.4msf. BRGD has an 18.11msf launch pipeline spread over three years. Collections were at 99%, with new leasing of 0.1msf. Chennai WTC is expected to be fully leased out in FY22. In the retail segment, mall occupancy stands at 85% and consumption returns to 90% of pre-COVID level. BRGD expects a normalised rent from Q1FY23. Realised rent was up 4.7% YoY and rental for FY22 is expected at INR 4.5bn.

QIP proceeds to fund land Capex and drive residential business growth: INR 5bn of QIP proceeds reduced the net debt to INR 31bn from INR 35bn in Mar-21. Net D/E stands at 0.86x (1.15 in Mar-21). The average cost of borrowing has also come down to 8.14% from 8.40% in the previous quarter. BRGD is expected to make a land Capex of INR 1.5bn this year. All future land Capex will be outright purchase without any debt component. The current land bank has 35msf saleable area (7-8msf launches planned annualy).

Shares of Brigade Enterprises Limited was last trading in BSE at Rs. 340.3 as compared to the previous close of Rs. 334.6. The total number of shares traded during the day was 39812 in over 1754 trades.

The stock hit an intraday high of Rs. 348 and intraday low of 330.35. The net turnover during the day was Rs. 13538141.

Source: Equity Bulls

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