Buy Brigade Enterprises Ltd for the Target Rs 700 by Prabhudas Liladhar Ltd
H2FY27 launch pipeline remains strong
Brigade Enterprises Ltd (BRGD) reported muted pre-sales, declining 10% YoY, along with an 18% YoY decline in collections in Q2FY27. Despite weak H1, management reiterated its full year guidance of INR90bn pre-sales indicating strong H2 launch pipeline. BRGD has delivered healthy pre-sales CAGR of 22% over FY23–26, led by new launches, entry into new markets, and premiumization. Further, annuity income saw 20% increase during the period. Supported by a healthy launch pipeline (~7-8msf) and strategic expansion into Chennai and Hyderabad, we expect pre-sales to clock 10-12% CAGR over FY26–28E. Further, given the strong OCF generation and comfortable balance sheet position, BRGD should be able to comfortably fund BD and capex. Maintain ‘BUY’ rating with TP of INR 700/share.
In line EBITDA:
Operationally, BRGD’s EBITDA improved 29% YoY to INR 4.2bn; in line with our estimates; with EBITDA margin increasing sharply to 35.5% vs. 23.7% in Q2FY26 aided by revenue recognition from higher-margin projects. For H1FY27, The EBITDA stood at INR 7.9bn; up ~21% YoY, with OPM at 34% (up ~950bps). Consolidated revenues declined 14% YoY to INR 12bn. H1FY27 revenues declined by 13% to INR 23.1bn. PAT increased by 19% YoY to INR 1.9bn in Q2 and increased ~26% YoY to INR 3.9bn in H1. Net debt adjusted for JV increased by INR 5.5bn QoQ to INR 20.9bn in Q2.
Pre-sales below our estimates:
BRGD’s pre-sales declined 10% YoY to INR 18.3bn (1.32msf sold), driven by the launch of Barcelona (Hyderabad), Misty Green (Mysore) and Meadows. QoQ pre-sales increased by 72% due to lower base where pre-sales were limited to sustenance sales in Q1FY27. New launches accounted for 34% of the pre-sales in Q2. Pre-sales for H1FY27 were down ~8% YoY to INR 28.9bn, with total area sold at 2.06msf during the period. Karnataka accounted for the largest share of residential presales (52%), followed by Telangana at 34% and Tamil Nadu at 14% during the quarter. Average price realization improved 29% YoY to ~INR 13,841psf in Q2FY27. Leasing income decreased by 4% YoY to INR 3.3bn with EBITDA of INR 2.4bn. Hospitality revenues improved by 16% YoY to INR 1.6bn with 37% EBITDA margins in Q2FY27. Q2 collections decreased by 18% YoY and 12% QoQ to INR 16.3bn. On the cost side, construction costs decreased 16% YoY to INR 7.2bn
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SEBI Registration number is INH000000933
