Brigade Enterprises Q4 Results Review - Residential Back In Action: Dolat Capital

Presales at Rs14.9bn increased 47% QoQ and 45% YoY with sales volume increasing 55% QoQ and 53% YoY. Notably new launches during the Q accounted for 60% of the presales.

Core FCFE increased 29% QoQ and 4% YoY to Rs3.5bn aided by robust collections of Rs14.6bn (+10% YoY and QoQ). The surplus cash is utilized in retiring pending land liabilities amounting to Rs4.8bn. As of FY23, land liabilities stand at Rs7bn; equating to two quarters of surplus CF.

Leasing activity of 0.2msf is holding steady QoQ; taking FY23 leasing to 1.2msf. Active pipeline of >1msf intact in the office portfolio. The retail portfolio witnessed 78% YoY increase in retail sales consumption in FY23 while footfalls in malls jumped 106% YoY.

Maintain Reduce with a revised TP of Rs590 (vs. Rs560). Price revision is on account of incorporating new project additions (FY23 BD amounting to Rs50bn in GDV) and scaling our presales higher by 2-5% for FY24-FY25. Over the med-term, we see Brigade delivering stable residential market share in its core market Bengaluru and achieving modest rental growth. However, unfavorable positioning on land reserves relative to peers remains a drag on FCF. Key upside risks to earnings and TP include higher sales velocity in new launches, margin accretive land acquisition, visibility on new segments (warehousing / industrial), higher FSI for existing & upcoming commercial projects and geographic diversification with scale.