MOSL: BRIGADE ENTERPRISES (Buy)-New launch contribution impressive-robust performance to continue
Brigade Enterprises: New launch contribution impressive; robust performance to continue
(BRGD IN, Mkt Cap USD0.4b, CMP INR228, TP INR324, 42% Upside, Buy)
- Pre-sales up 2x on new launches: BRGD reported pre-sales of 0.97msf (+125% YoY), booking value of INR5,198m (+121% YoY) and average realization of INR5,426psf (-2% YoY) in 4QFY19. Growth was mainly driven by its new launch Brigade Utopia in Bengaluru. For FY19, pre-sales increased 89% YoY to 2.97msf (FY18: 1.57msf), while booking value grew 83% YoY to INR16.4b (FY18: INR8.9b).
- Strong revenue growth but mix change impacts margins: BRGD’s revenue grew 75% YoY to INR7,600m (our estimate: INR6,725m) in 4QFY19. EBITDA increased 60% YoY to INR2,154m (our estimate: INR1,648m), with the margin down 280bp YoY to 28.3% (our estimate: 24.5%) due to a mix change. Adj. PAT soared 139% YoY to INR597m, higher than our estimate of INR307m.
- Prospects bolstered by robust leasing trends: In FY19, BRGD leased 0.6msf in Brigade OPUS and WTC Kochi phase II, and pre-leased 0.6msf between Brigade Tech Gardens and WTC Chennai. Leasing income improved due to renewals of certain space (+20-25%) in WTC Bangalore and Orion Mall, which, along with new leasing, will likely support growth in FY20. BRGD is on track to complete BTG and WTC Chennai by Dec’19, before the 2020 sunset clause deadline.
- Earnings call highlights: (a) Residential launches of 5.5msf are planned in FY20. (b) In FY20, BRGD intends to achieve pre-sales of ~4msf and pre-leasing of 3msf (WTC-Chennai: ~1msf+; Brigade Tech Gardens: ~1.5msf; others ~0.5msf).
Brigade Enterprises Limited is a property development company. The Company focuses on residential, offices, retail and hospitality projects. The Company operates through three segments: Real Estate segment, Hospitality segment and Leasing segment. Its residential properties include Brigade Altamont, Brigade At No. 7, Brigade Caladium, Brigade Cosmopolis, Brigade Exotica, Brigade Mountain View, Brigade Orchards Luxury Apartments, Plumeria At Brigade Meadows and Brigade Sparkle. Its commercial projects include Brigade Bhuwalka Icon, Brigade Irv Centre, Brigade Magnum, Nalapad Brigade Centre and Signature Towers Brigade Golden Triangle. The Company's retail projects include Orion East Mall, Nalapad Brigade Broadway and Brigade Vantage. Its hospitality projects include Woodrose Club, Augusta Club, Galaxy Club, MLR Convention Centre and Signature Club Resort. Its projects extend across various cities in South India, including Chennai, Chikmagalur, Hyderabad, Kochi, Mangalore and Mysore.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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