Buy Brigade Enterprises Ltd for the Target Rs. 1,494 by Motilal Oswal Financial Services Ltd
Healthy operating performance as launches intensify
Residential launch pipeline of 11msf provides near-term growth visibility
* In 2QFY26, Brigade Enterprises (BRGD) reported a 12% YoY presales growth (in line), reaching INR20.3b. The company recorded volumes of 1.9msf (+13% YoY; 9% above our expectations). In 1HFY26, presales rose 8% YoY to INR32b, while volumes were flat at 2.9msf.
* Consolidated collections rose 3% YoY to INR20b (in line).
* BRGD launched two residential and one plotted projects, with a TDA of 2.02msf in 2QFY26 across Bengaluru. Overall in 1HFY26, it launched three residential and one plotted projects, with a TDA of 3.11msf across Bengaluru and Chennai.
* BRGD plans to launch ~11msf in the next four quarters across Bangalore, Chennai, Hyderabad, and Mysuru.
* In 1HFY26, Brigade Group acquired a prime land parcel on Velachery Road, Chennai, for premium residential development with a total potential of 0.8msf, resulting in a GDV of INR16b. BRGD acquired this land for INR4.4b.
* The company’s gross debt stood at INR42.9b, while net debt was INR17.7b. Its net debt to equity stood at 0.22x by the end of 2QFY26 (vs. 0.34x in 1QFY26); the cost of debt declined to 8.05% during the quarter.
* Leasing: Leasing revenue grew 16% YoY to INR3.4b while EBITDA stood at INR1.9b with a margin of 56%. In 1HFY26, leasing revenue grew at 15% YoY to INR6.4b, while EBITDA stood at INR3.6b with a margin of 56%.
* Portfolio occupancy stood at 92% with an overall leasing of 8.67msf out of 9.38msf.
* It launched two commercial projects with a TDA of 0.72msf across Bengaluru and Chennai. Overall, in 1HFY26, it launched four commercial projects with a TDA of 1.26msf across Bengaluru, Gujarat, and Chennai.
* Around 4.21msf of area will be launched in the next four quarters.
* Hospitality: Brigade Hotel Ventures Limited (BHVL) reported revenue of INR1.4b, which rose 16% YoY, while EBITDA stood at INR420m.
* 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 agreement with Marriott International.
P&L performance
* In 2QFY26, BRGD’s revenue increased 29% YoY to INR13.8b (14% above our estimate). In 1HFY26, its revenue grew 24% YoY to INR26.6b.
* EBITDA stood at INR3.3b, up 12% YoY (24% below estimates). EBITDA margin came in at 23.7%. In 1HFY26, EBITDA increased 11% YoY to INR6.5b with margins at 24.5%.
* BRGD’s adj. PAT jumped 37% YoY to INR1.6b (32% below estimates), clocking a margin of 12%. In 1HFY26, PAT increased 54% YoY to INR3.1b with margins at 11.7%.
Valuation and view
* BRGD reported 12% booking growth on a YoY basis, while bookings were up 82% sequentially due to an increase in launches this quarter. It has a strong residential launch pipeline of ~11msf, which should enable it to sustain the growth traction going forward.
* 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 reiterate our BUY rating with a revised TP of INR1,494 (vs. INR1,470), implying a 44% potential upside.
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