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Robust turnaround

BRGD reported operationally a robust quarter as residential pre-sales grew to 1.53msf (+41%/+55% YoY/QoQ). Sales value jumped to Rs 9.2bn (+53%/+60% YoY/QoQ), as realisation grew by +8%/+3.5% YoY/QoQ.

Collection from the resi. sales also increased by 29% sequentially to Rs 5.1bn. While leasing activity remained tepid, rental collection from existing portfolio continued to be healthy at 99% in 3QFY21. While mall consumption reached 65% of preCOVID level, hospitality business surpassed the break-even mark during the quarter.

Consolidated net debt decreased marginally to Rs 29.5bn (BRGD’s share) from Rs 29.5bn on Sep-20. Despite the mid-term challenges in hospitality and retail business, maintain ADD with an unchanged TP of Rs 288, given the strong momentum in residential business. We have tweaked our est. marginally. Pick-up in commercial leasing would lead to further rerating

* Revenue misses estimates: Revenue for the quarter came in at Rs 6.5bn (+17%/+107% YoY/QoQ), 6% below our estimates. EBITDA declined by 5% YoY as margin contracted by 514bps. Adjusting for the exception item (write-off of Rs 400mn investment in Laxmi Vilas Bank), APAT came in at Rs 239mn, 52% decline YoY and inline with our estimate. With improving labour availability, increasing occupancy in hotels and rising footfalls at malls, we expect revenue to recover from next fiscal.

* Residential sales at record high; leasing pick-up awaited: BRGD registered record pre-sales of 1.53msf on good response to a newly-launched project in Hyderabad (0.45msf). However, Brigade continues to face headwinds in the commercial business as new leasing remained tepid at 0.12msf in 3QFY21. Basis management commentary, BRGD has ~1msf leasing pipeline but closures are getting delayed due to prevailing market condition.

* Balance sheet remains stable: Consolidated net debt decreased marginally to Rs 38.1bn (vs Rs 38.3bn on Sep-20), of which Rs 21.4bn is LRD/GOP securitised debt. With Rs 4.8bn of cash, net D/E stood at 1.27x. Total collections improved to Rs 6.8bn during the quarter from Rs 5.4bn in 2QFY21 as collections from residential segment increased to Rs 5.2bn (vs Rs 4bn in 2QFY21). BRGD generated positive OCF of Rs 2.5bn during 3QFY21.

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