1. BRIGADE ENTERPRISES: Strong operational performance; Traction likely to continue
(BRGD IN, Mkt Cap USD0.6b, CMP INR207, TP INR245, 18% Upside, Buy)
- Pre-sales soared 24% YoY to 1msf in 2QFY20; booking value was up 15% YoY to INR5,288m with average realization of INR5,306psf, down 8% YoY. Growth was largely driven by affordable housing (AFH) projects (Eldorado and Utopia), which contributed 45% to the sales volume.
- 2QFY20 financial performance: BRGD’s revenue/EBITDA declined 11%/13% YoY to INR7,353m/INR1,902m. PBT stood at INR653m, down 51% YoY. This was mainly due to increased interest cost (up 35% YoY) and depreciation (up 40% YoY) due to capitalization of Brigade Opus, WTC@Kochi Tower 2, BTG Phase I and Four Points by Sheraton (Kochi). Adj. PAT was down 45% YoY to INR374m.
- 1HFY20 performance: Sales/EBITDA/Adj. PAT declined 5%/6%/40% to INR14.4b/INR3.7b/INR0.8b; EBITDA margins contracted 30bp YoY to 25.8%.
- Strong traction continues in Leasing: During 2QFY20, BRGD leased 0.6msf of new office area with an est. rental yield of INR440m. At WTC Chennai and BTG Bengaluru, BRGD has already leased 1.37msf (excl. hard option) and management is confident of achieving 3msf of total leasing in these assets by end-FY20.
- 2QFY20 earnings call highlights: (a) Newly launched project in 2QFY20 (Brigade Orchards Kino) has seen strong demand; (b) Management is confident of achieving 10-12% increase in incremental leasing rate for WTC and BTG; and (c) Management expects stake sale in the Hospitality segment in the near term.
- Valuation and view: We maintain our pre-sales estimate at 3.8msf/4.2msf for FY20E/FY21E, broadly maintaining our leasing and hotel segment estimates too. We expect the strong momentum to continue across business segments, and thus, maintain our PT of INR245/share. Maintain Buy.
No comments:
Post a Comment