Gladiator Stocks - Brigade Enterprises - ICICI Direct

Technical View

The Nifty realty index is seen rebounding after a base around the previous multiyear breakout area and 52 week's EMA, thus offering a fresh entry opportunity in realty stocks with a favourable risk reward set-up. Brigade Enterprise has been resilient within the realty space during the recent market correction and has formed a higher base in the last four months around the 100 day's EMA (currently at Rs. 453 levels). It has acted as an incremental buying opportunity in the entire up move since July 2020

Buying demand is seen emerging in the stock from the lower band of the last four month's range and rising demand line joining lows since October 2020, thus offering a fresh entry opportunity

The stock has already taken 19 weeks to retrace just 50% of the preceding 10 week's rally (Rs. 292-528). A shallow retracement signals a higher base formation and a robust price structure

Fundamental View

Brigade Enterprises (BEL) is one of the leading property developers in South India. Its offerings include Grade-A commercial property, affordable to ultra-premium housing in real estate business and operational marquee hotel assets in the hospitality segment

As per the management, the residential bookings continue to remain strong with uptick in demand for completed and larger sized inventory, better affordability due to lower interest rate. and right pricing/location of the projects. Going forward, the management endeavours to achieve healthy double digit sales growth. Going forward, the company has a strong pipeline of 16.8 mn sq ft of ongoing projects. Out of these, 2.4 mn sq ft and 6-7 mn sq ft are likely to get launched by Q1FY23 and FY23E-end, respectively. The project pipeline is likely to aid sales volume, going ahead, along with continued traction in ongoing/completed projects and other new projects

Commercial leasing segment remains stable for BEL and has achieved 99% collections (amount: Rs. 96 crore in Q3FY22). The company has renewed ~98.5% of total contracts, which were due during Q3FY22 (offered no-discount in lease rents). Also, BEL is experiencing higher leasing enquiries and physical site inspections for larger and mid-sized spaces backed by increased momentum in finance, and IT and ITeS sector. As of now, the company has an active pipeline of ~0.8 mn sq ft. Going forward, the management expects ~90% of yet to transacted area (~2.45 mn sq ft) to get leased over the next three quarters

For details, click on the link below:

Link to the report

Source : Equity Bulls

Keywords

GladiatorStocks BirgadeEnterprises ICICIDirect