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MOSL: BRIGADE ENTERPRISES (Buy)-Strong operating performance across business segments

Brigade Enterprises: Strong operating performance across business segments

(BRGD IN, Mkt Cap USD0.7b, CMP INR240, TP INR280, 17% Upside, Buy)

 

Positive outlook despite subdued industry sentiments, Maintain Buy

  • BRGD has continued to deliver strong pre-sales volume of 1msf+ over the last few quarters despite subdued residential demand and has guided for maintaining its momentum, coupled with a strong commentary around the leasing and hospitality segment.
  • Given BRGD’s robust momentum in residential pre-sales volume, we raise our volume estimates for FY20E by 10% to 4.2msf, while broadly maintaining our leasing and hotel estimates. Maintain Buy. 

Firing on all cylinders

  • Maintaining momentum in residential segment: BRGD’s 3QFY20 pre-sales volume/value was up 39%/35% YoY to 1.08msf/INR6.0b. Average price realization (INR/psf) was down 3% YoY to INR5,580, largely on account of a product mix shift towards the affordable housing (AFH) and mid-income segments.
  • Leasing segment remains on strong footing: For 9MFY20, BRGD leased 2.24msf of office and retail space with an estimated rental yield of INR2.12b (incremental leasing of 0.87msf in 3QFY20 with rental yield of INR1.02b).
  • Hospitality segment to see new asset additions: Grand Mercure – GIFT City (159 keys) commenced operations in January 2020 and Holiday Inn Express - Bangalore OMR (134 keys) is expected to become operational by 4QFY20. We expect hospitality revenue to grow at a CAGR of 13% over FY19-21E, driven largely by the addition of new assets, higher occupancy and improved realization.
Underlying
Brigade Enterprises

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.

Provider
Motilal Oswal
Motilal Oswal

​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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