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Strong Pre-sales….Expensive valuation

Brigade Enterprises Ltd. (BRGD) is one of India’s leading property developers, with over three decades of expertise. Since its inception, Brigade has completed 280+ buildings, amounting to over 86msf. of developed space across a diverse real estate portfolio.

* In Q4FY24, BGRD reported steady pre-sales growth of ~15%, with booking value increasing ~51% YoY. The average realization stood at Rs.8,243 per sft (+31% YoY).

* In Q4FY24, revenue expanded ~102% YoY, leading to an increase of 234% YoY in PAT with a margin of 12% in the same period.

* The leasing segment reported a growth of ~28% YoY with an incremental leasing of ~1msf in the fiscal. Occupancy was ~97% across SEZ projects and 100% in Non-SEZ projects.

* BRGD outlines a forthcoming launch pipeline of ~13msf in residential, 0.5msf in hospitality, and 3msf in commercials, reinforcing its expansion across diverse segments.

* Brigade is positioned well in the market with robust bookings, strong launches and optimistic conditions in realty sector. However, the stock has priced in these factors and trades at a premium valuation. Hence, we reiterate our SELL rating on the stock with a revised target price of Rs.1,070 based on 5x FY26E BVPS.

Bangalore leading the run…. 

Brigade clocked a pre-sale of 7.55 msf with a value of Rs. 6,013cr (+46% YoY) aided by its 5.26Msf launches in FY24. Additionally, the company reported the highest ever realisation (+23% YoY) during the same period. Furthermore, the company is planning to launch ~12.6mnsft in the coming year, with 7.5msf is planned in Bangalore, 3msf in Chennai, and the rest in Chennai and Mysore. The upcoming launches with a GDV 130bn, along with the saleable inventory of 2.3msf in ongoing projects, are expected to carry the sales momentum in the coming years as well.

High margin annuity portfolio 

Brigade reported a 32% increase in lease income with an improved EBITDA margin of 71%, backed by incremental leasing of ~1msf this year. Company’s leasing portfolio of 1.31mnsf retail space and 7.37msf of commercial space operates at an occupancy of 95% with ~0.28msf vacant space. In addition, the company has an upcoming 1.96msf leasable area, which is expected to support the annuity growth in the coming years.

Hospitality...encouraging growth

BRGD’s hospitality segment is on a stable footing, with 1,474 keys in operation. The segment reported a growth of 18% (YoY) in revenue on the back of improved Average Revenue per Room (ARR) and occupancy.; ARR stood at INR 6,483 and occupancy at 72% for FY 24, a growth of 8% & 4% YoY, respectively. BRGD’s upcoming project (IBIS Styles, Mysore) with a balance capex of ~30% to incur will support growth in the future.

Valuation

Brigade is positioned well in the realty market with a diversified portfolio, robust bookings in residential, and a strong pipeline of launches to capitalize on the robust demand in the Indian realty sector. However, the stock has priced in these factors and currently trades at a premium valuation. Therefore, on a cautious note, we reiterate our SELL rating on the stock with a revised target price of Rs.1,070 based on 5x FY26E BVPS.

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