Brigade enterprises Ltd - Research Report - Rating - ACCUMULATE - Arihant Capital Markets

Brigade has a diverse and mature portfolio of real estate, lease rental and hospitality businesses and successfully expanded footprints beyond Bengaluru & Mysuru to other high-growth potential cities like Chennai, Hyderabad, Kochi, Mangaluru and GIFT City, Gujarat.

It has an in-house, fully integrated property development team comprising engineers and architects who oversee the development of properties from inception to completion. Its land bank strategy includes outright purchase of land parcels as well as entering into joint development agreement (revenue / profit share) with land owners. Its product mix consists of premium residential apartments, mixed use developments and affordable homes.

As a part of our diversification strategy, company aims to increase revenues from the leasing business.

Company has Completed nearly 200 buildings amounting to over 30 million square feet across residential, offices, retail and hospitality sectors and currently in the process of developing 30 million square feet across seven cities over the next five years.

As per management statement in annual report of FY17 Company will be launching 11.53 mn. sq. ft. during the financial year 2017-18. This will comprise of 5.02 mn. sqft. of real estate space, 5.76 mn. sq. ft. of Commercial Space and 0.13 mn. sq. ft. of Hospitality space.

The company expects good demand for its projects, now that RERA/GST uncertainty is clear. It plans to double its hospitality portfolio from 1,000 keys currently to 2,000 keys over next 2-3 years.

Outlook & Valuation

Brigade, September Quarter sales were up 8% YoY to Rs 484Cr and PAT was up by 38% YoY to Rs 41.62 Cr. Company plans to increase focus on hospitality and leasing business and is expected to improve on its sales with diversified portfolio.

BEL highlighted the fact that sales for Q2FY18 were slow because of RERA-related compliance. Going forward sales are expected to pick up from Q4FY18, as BEL is launching 2.4 mn sq ft under both residential and commercial project, 2mn sq ft of commercial-lease project and building 0.43 mn sq ft of two IBIS Hotels in the second half of FY 17-18.

Our Estimated Earnings per share (EPS) for FY 18 is 17.50. We arrive at target price of Rs. 350/Share, with Estimated P/E of 20 for FY2018. We have 'ACCUMULATE' rating on the stock, considering projects that have visibility over next year.

Shares of BRIGADE ENTERPRISES LTD. was last trading in BSE at Rs.314 as compared to the previous close of Rs. 300.3. The total number of shares traded during the day was 18489 in over 879 trades.

The stock hit an intraday high of Rs. 315 and intraday low of 297. The net turnover during the day was Rs. 5733727.

Source : Equity Bulls

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