Brigade Enterprises - Promising Outlook, Better Results Across The Board: Geojit Initiates Coverage

Geojit Research Report

Brigade Enterprises Ltd. is one of India’s leading property developers, with over three and a half decades of expertise. The company has developed many landmark buildings and transformed the skylines of cities across South India.

Since its inception, Brigade has completed 250 plus buildings, amounting to over 76 million square feet of developed space across a diverse real estate portfolio.

• Pre-sales grew by 25% YoY to ~4 msf with a value of Rs 2,619 crore (up 31% YoY) for nine months-FY23. We expect the momentum to continue, aided by a healthy pipeline.

• The average realisation has grown at 6% compound annual growth rate for the last thee years. The current realisation is Rs 6,599/sqft, but dropped 1.2% QoQ due to plotted development pre-sales. The realisation is expected to impact the next few quarters.

• Robust leasing segment with 7.2 msf (up 19% YoY) of leased space. Active pipeline of ~1.4 msf. At full occupancy, the annual exit rental for current lease assets will be ~Rs 800 crore.

• Hospitality revenue increased 61% YoY to Rs 101 crore for Q3 FY23. Ebitda increased to Rs 21.1 crore (up 17.9% YoY). In Q3 FY23, average revenue per room increased by 58% YoY, while occupancy increased by 14%.

• We have a positive view on Brigade on the back of a robust residential pipeline (9 msf), healthy cash flows, and the revived hospitality segment. But a rising mortgage rate for a longer period can be a headwind.

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