Maintain ADD on Brigade Enterprises - Pick-up in leasing awaited - HDFC Securities

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

BRGD reported another record quarter as presales grew to 1.7msf (+57%/+9% YoY/QoQ). Presales value jumped to INR 10.2bn (+56%/+10% YoY/QoQ). Construction progress led to a record collection of INR 8.4bn in residential business (vs INR 5.1bn in 3QFY21). Collection in the commercial portfolio continued to be healthy at 99% in 4QFY21. While retail consumption reached 90% of the pre-COVID level, hospitality GOP margin improved QoQ to 22% from 16%. Despite the mid-term challenges in hospitality and retail business, we maintain ADD with an increased TP of INR 296 (vs INR 288 earlier), given the strong momentum in resi. business. We have cut our est. to account for weakness in hospitality, retail/office lease and slower residential construction.

Beat on estimates: BRGD reported rev./EBITDA of INR 7.9/1.9bn respectively for the quarter, 8/7% beat on est. EO items of INR 363mn include INR 178mn stamp duty payable on merger of BREPPL with BPPL and INR 185mn write-down of certain investment properties in leasing and hospitality segments. Adjusting for these, APAT comes to INR 759mn, ~2.3x our est. on higher-than-expected revenue and other income (INR 296mn vs INR 87mn estimate). With fall in labour availability, lower occupancy in hotels, and reducing footfalls at malls, we expect a muted 1QFY22.

Residential sales at record high; headwinds in leasing: On the back of 6msf of launches, BRGD registered record presales of 4.3msf in FY21. The company continues to face headwinds in the commercial segment. Basis management commentary, BRGD has ~1msf leasing pipeline but closures are getting delayed. Rents for BTG Ph-2 and WTC Chennai would start from 2QFY22. For malls, rental concessions during the current lockdown would be the same as extended during the first lockdown.

Balance sheet remains stable: Consolidated gross debt remained stable QoQ at INR 43bn, of which INR 25.6bn is LRD/GOP securitised debt. With INR 7.3bn of cash, net D/E stood at 1.15x (1.27x on Dec 20-end). Continued momentum in presales, steady collection in commercial portfolio, consumption recovery at malls, and construction progress led to the highest- ever quarterly collections of INR 11.2bn (vs INR 6.8bn in 3QFY21) in 4QFY21. BRGD expects the economic share of net debt at ~INR 30bn in the near term vs Rs 26.5bn at the end of FY21.

Shares of BRIGADE ENTERPRISES LTD. was last trading in BSE at Rs.265.15 as compared to the previous close of Rs. 259.15. The total number of shares traded during the day was 19229 in over 1018 trades.

The stock hit an intraday high of Rs. 268.75 and intraday low of 254.2. The net turnover during the day was Rs. 5076262.

Source : Equity Bulls

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