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Operating performance hit by limited launch activity

Residential launch pipeline of 13msf provides near-term growth visibility

• Brigade Enterprises (BRGD) reported a 3% YoY growth in 1Q pre-sales to INR11.2b, 56% below our estimates, mainly because only one project with 1.09msf of potential was launched in Chennai. The company recorded volumes of 0.95msf (-17% YoY; 63% below our expectations) in 1QFY26.
• Consolidated collections rose 8% YoY to INR17.3b (31% below estimate).
• BRGD launched 1.63msf of projects in 1QFY26 in Chennai, Bengaluru, and Gujarat (one residential and two commercial projects).
• The company plans to launch ~13msf of residential area in the next four quarters in Bangalore, Chennai, Hyderabad, and Mysuru.
• In 1QFY26, Brigade Group acquired a prime land parcel on Velachery Road, Chennai, for INR4.4b for premium residential development, with a total potential of 0.8msf and a GDV of INR16b.
• Gross debt was INR47.5b, while net debt was INR22.7b. Brigade’s share of debt stood at INR15.3b. Its net debt-to-equity ratio stood at 0.34x by the end of 1QFY26 (vs. 0.14x in 4QFY25). The cost of debt was 8.25%.
• Leasing revenue grew 15% YoY to INR3b, while EBITDA stood at INR2.2b.
• BRGD had a balance capex commitment of INR8b out of a total ongoing capex of INR11.8b for commercial assets.
• About 2.6msf of commercial area will be launched in the next four quarters.
• Hospitality: The business was listed on 31st Jul’25 under the name of Brigade Hotel Ventures Limited (BHVL), wherein Brigade Enterprises holds a 74.09% share. BHVL’s revenue rose 19% YoY to INR1.4b, and EBITDA grew 34% YoY to INR480m.
• BHVL currently has 1,604 keys. Nine hotels with a total of 1,700 keys are under the planning stage, of which six hotels with 940 keys are in an agreement with Marriott International.

P&L performance

• Revenue increased 19% YoY to INR12.8b (34% above our estimate).
• EBITDA stood at INR3.2b, up 11% YoY (in line). EBITDA margin came in at 25.3%.
• Adj. PAT jumped 79% YoY to INR1.5b (19% below estimate), clocking a margin of 12%. The miss was attributed to higher-than-expected depreciation and interest costs.

Valuation and view

• BRGD reported flat bookings growth on a YoY basis, while bookings were down 54% sequentially due to the absence of material launches this quarter. Although it has a strong residential launch pipeline of ~13msf, which should enable it to sustain the growth traction going ahead.
• Management intends to keep assessing growth opportunities in the residential segment and expects to spend more on business development over the next two years. This will provide growth visibility in the residential segment and lead to a further re-rating
• We have adjusted for BRGD’s ownership (74.09%) in the hotel business and thereby valued its hotel arm. We reiterate our BUY rating with a revised TP of INR1,470 (vs. INR1,580), implying a 57% potential upside.

Highlights from the management commentary

• Demand/Sales/Margins: Management indicated strong on-ground demand, with all upcoming launches to be fully priced. Brigade aims to sell 50% of the inventory within the initial few quarters post-launch, and the balance to be sold as part of sustenance. The company guided ~15–20% YoY growth in pre-sales and a 10% price increase for like-to-like projects. Embedded EBITDA margins are likely to remain in the 27–30% range for the full year, including FY26.
• New launches/pipeline: In 1QFY26, BRGD launched Morgan Heights Ph 1 (residential), El Dorado Commercial B Block (commercial), and International Finance Center Ph 2 (commercial), covering areas of 1.1/0.1/0.5 msf, respectively, in Chennai, Bengaluru, and Gujarat. Typically, projects are launched within 12 months of acquisition. Of the total sales in 1QFY26, ~50% were from new launches.~75% came from Bengaluru, while the remaining 23- 24% came from Chennai and 1-2% from Hyderabad. BRGD has a pipeline of nearly 13 msf of upcoming residential launches across key cities—Bengaluru (7 projects), Chennai (4 projects), Hyderabad (3 projects), and Mysuru (2 projects). INR46b of GDV will be launched by 2Q and 3Q. This includes project Cherry blossom and Avalon in Bangalore, which were already launched in 2Q, and the rest will come from Gateway and phase 2 of Morgan Heights, which will be launched.
• Of the total collections, INR12.5b was towards real estate, INR3b towards commercial, and INR1.7b towards hospitality.
• In the coming few quarters, average realization should remain flat, while it will increase in the near term.
• Business development: In 1QFY26, BRGD acquired INR112b of GDV across Bangalore, Chennai, and Hyderabad. An additional INR13.8b is planned to be incurred on land acquisitions, of which INR5b has already been spent in 2QFY26. Balance INR8.8b to be spent in 12-18 months. The company is in negotiations for other projects in Hyderabad and is exploring opportunities in additional geographies.
• Commercial: Construction commenced for Brigade Tech Boulevard, Chennai (0.8 msf) and Brigade Padmini Tech Valley Block B (0.7 msf), with ~30% of the commercial space already leased or sold.
• Hospitality: Brigade Enterprises listed its hospitality arm, Brigade Hotel Ventures Limited (BHVL), on 31st July 2025, retaining a 74.09% stake. In 1QFY26, BHVL reported a 19% YoY increase in revenue to INR1.4b and a 34% YoY rise in EBITDA to INR480m. The company currently operates 1,604 keys and has nine hotels with a total of 1,700 keys in the planning stage, including six properties with 940 keys under agreement with Marriott International. Cost of construction is likely to be at INR10m-15m per key for the 5-star category, while for the 4-star it will be at INR7-7.5m.
• Credit rating upgrade: CRISIL upgraded BRGD’s credit rating from AA- (Stable) to AA- (Positive). ICRA upgraded the rating to AA (Stable).

Valuation and view

• We value BRGD based on our DCF approach:
• Its residential business is valued by discounting cash flows from the residential portfolio at a WACC of 11.3%, accommodating BD done in FY25 and land investments of INR20b for development.
• Its operational commercial assets are valued at an 8.5% cap rate on a Mar’26E basis, and ongoing and upcoming projects using DCF.
• Its Hospitality business is valued at 15x EV/EBITDA on an FY26E basis. As the hospitality arm – Brigade Hotel Ventures Limited has officially listed, we have adjusted Hotels valuation with Brigade’s Share i.e., 74.09% and also given a 20% holdco discount.
• Based on the above approach, we arrive at a GAV of INR303b. Netting off the 1QFY26 net debt of INR15b, we derive the NAV of INR287b. Further, to accommodate future growth and the going concern, we ascribe a 35% premium to the current residential and office assets, arriving at a post-premium NAV of INR359b or INR1,470 per share (earlier INR386b or INR1,580 per share), indicating a potential upside of 57%.

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