MOSL: BRIGADE ENTERPRISES (Buy)-Robust volume growth-beat on estimates
Brigade Enterprises: Robust volume growth; beat on estimates
(BRGD IN, Mkt Cap USD0.4b, CMP INR206, TP INR283, 37% Upside, Buy)
- Strong operational performance: BRGD reported pre-sales of 0.78msf (+68% YoY), booking value of INR4,459m (+70% YoY) and average realization of INR5,741psf (+1% YoY) in 3QFY19. For 9MFY19, the company achieved pre-sales of 2msf v/s 1.14msf in 9MFY18 (+76%). Its booking value came in at INR11,242m v/s INR6,616m in 9MFY18 (+70%).
- Revenue grew 62%; EBITDA margins decline: BRGD’s revenues grew 62% YoY to INR6,877m (v/s our est. of INR5,053m) in 3QFY19. Real estate/hospitality/ leasing businesses grew 81%/31%/6% YoY. Real estate business reported EBIT margins of 23% (-1,800bp YoY), while Leasing business reported EBIT margin of 49% (+100bp YoY). Hospitality business reported profit at EBIT level of INR57m v/s loss of INR62m. EBITDA margin contracted 1,200bp YoY to 25.6% (v/s our est. of 28.5%). EBITDA stood at INR1,759m (v/s our est. of INR1,440m), up 10% YoY. Adj. PAT rose 22% YoY to INR598m, higher than our estimate of INR364m. For 9MFY19, net sales/EBITDA/PAT grew 51%/37%/73% to INR22,127m/ INR5,743m/ INR2,099m. EBITDA margins contracted 300bp YoY to 26% for 9MFY19.
- 3QFY19 earnings call highlights: (a) BRGD intends to achieve pre-sales of 3msf for FY19 and 4msf by FY20. (b) Of the 3msf at Brigade Tech Gardens, 1.1msf has been constructed and OC has been received 6/7 months ahead of schedule. (c) BRGD has tied-up lease sales of ~0.10msf for WTC Chennai and 0.15msf for Brigade Tech Gardens. Plans are afoot to tie up lease tenants for ~0.7msf by 4QFY19.
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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