Brigade Enterprise ltd

Stocks marred in Controversies?
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This is my first post, recently came across Brigade Enterprise.

Brigade Group was established in 1986, with property development as its main focus.

Today, Brigade Group is one of South India’s leading property developers. They have a uniquely diverse multi-domain portfolio that covers property development, property management services, hospitality and education. There projects extend across several major cities in South India: Chennai, Chikmagalur, Hyderabad, Kochi, Mangalore and Mysore.

Brigade Group and GIC, Singapore’s sovereign wealth fund, through its affiliate Company, have entered into a Memorandum of Understanding on September 01, 2014 to jointly invest up to Rs. 1,500 crores in residential and mixed-use developments in select cities of South India. The Joint Venture aims to acquire land for residential and mixed-use development.

In FY15 management expect overall revenues to go up by 50 percent if not more .

Stock is trading at PE 19

http://www.screener.in/company/?q=532929

Crisil Research had assigned fundamental grade reflects Brigade’s strong brand equity due to high quality construction, a track record of timely delivery of projects and the resultant established position in the Bengaluru real estate market, which is poised for robust growth.

It expects absorption of residential and commercial projects to increase 7-10 percent over the next two years driven by 15-16 percent growth in the IT/ITeS industry, rising e-commerce industry and improving infrastructure.

The grade also factors in a strong project pipeline entailing the development of 47 million square feet (Brigade’s share is 35 million square feet). Of its ongoing projects of 12.5 million square feet, 51 percent are booked. Ramp-up in the construction of these projects is expected to drive revenue recognition, return ratios and future cash flows.

Bengaluru-based Brigade also has a strong portfolio of leased assets, which currently provide Rs 140 crore of rentals per annum. The report also said its hotels have robust occupancy of 75-80 percent and are profitable unlike many other hospitality assets in Bengaluru.

Crisil Research expects revenues to grow at a two-year CAGR of 43 percent to Rs 1,900 crore by FY16 driven by incremental revenue recognition in ongoing projects and steady growth in leased assets and hospitality projects. EBITDA margin is expected to improve from 33.8 percent in FY14 to 34.2 percent in FY16 primarily driven by revenue growth while PAT is expected to increase to Rs 2,800 crore in FY16 from Rs 80 crore in FY14.

In hospitality division it has signed MOU with intercontinental group of hotel to develop Holiday Express in, MOU will have 10 hotels by 2020. The first of which is Holiday Inn Express & Suites has already started in Bangalore opposite the race course and the 300 key hotels.

)- Company has been maintaining a healthy dividend payout of 22.06%

The only risk for the company will be slowdown in the IT/ITeS industry as this industry accounts for 75 percent of the real estate demand in Bengaluru. Brigade, with 76 percent of the total project pipeline in Bengaluru, would be adversely impacted by a slowdown.

Disclaimer: small position taken. Views invited.

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Brigade Enterprise Dec Qtr. Result looks not bad.
Quarter Highlights
Q3 FY18 Revenue is Rs. 4,336 Mn : 24% decrease over Q3 FY17 Rs.5,722 Mn
PBT for Q3 FY18 is Rs. 688 Mn :49% Increase over Q3 FY17 Rs.463 Mn
PAT (after MI) for Q3 FY18 is Rs. 489 Mn  61% Increase over Q3 FY17 Rs.304 Mn

Investor Presentation

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March-18 quarter was bad. Hope Q1 will be better

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Excellent results from Bridage today:

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Last three Concall High lights

Feb : https://www.bseindia.com/xml-data/corpfiling/AttachHis/369b8641-04b4-4959-8346-1122554c2c49.pdf

the right project in the right locations at the right prices’ customers continuing to trust Brigade for quality and service

new Project : November witnessed the launch of our new project in Hyderabad, Moti Nagar called Brigade Citade

On the collection front we have had our best quarter so far with Rs. 518 crores collected from the residential business Break up is r Rs. 518 crores in residential, Rs. 14 crores in commercial sale, leasing is Rs. 117 crores, hospitality Rs. 22 crores and of course Rs. 22 crores are the security deposit.

In our office segment our continued focus on collections of lease rentals has resulted in 99% collection

Pipe Line : As of date our pipeline is over 1 million square feet in Brigade Tech Gardens, Bangalore; World Trade Center, Chennai; and the Brigade International Financial Center, Gift City. The pipeline constitutes large and medium sized enquiries at Brigade Tech Gardens to medium sized enquiries at World Trade Center, Chennai

debt position, there was a reduction of Rs. 141 crores in real estate debt which was driven by the higher sales and collections

Almost 73% of the debt pertains to commercial segment of which 40% is backed by lease rentals income

Twin Towers Project : It will take two years’ time to complete and the market conditions at the end of two years are likely to be very, very different and quite positive

land negotiations: e in Q3 we did acquired totally about 30 acres of the proposed 47 acres to 50 acres in what we are currently calling it as Brigade Utopia 2. We have acquired about 30 acres of total land and in addition to that we have also finalized another parcel of some 35 acres which is under due diligence ( it is in BANGLORE ) . So that should also give us about 5 million square feet to 6 million square feet once the due diligence is complete and the formalities are completed.

bulk of our projects are also in the mid segment which is between you can say Rs. 50 lakhs to Rs. 125 lakhs range

FOVUSED MARKETS : Bangalore, Chennai, and Hyderabad as our focus markets

May 2021 : https://www.bseindia.com/xml-data/corpfiling/AttachHis/1911b837-8f27-41c6-95d2-930c52d28120.pdf

We clocked over 1.66 mn.sq.ft. of new booking in a quarter for the first time having a value of Rs.1,018 crores. We have also had our best quarter on the collections front at Rs.840 crores in Q4, a growth of 58% from the previous quarter , Break up is breakup for Q4, as I said Rs.840 crores is from residential, commercial sale is Rs.61 crores, commercial lease is Rs.60 crores, retail is Rs.32 crores, hospitality is Rs.96 crores and maintenance site PMS is around Rs.29 crores. So that adds up to Rs.1,118 crores.

our high probability pipeline is around 1 mn.sq.ft. in Brigade Tech Gardens, Bangalore and World Trade Center, Chennai and (BIFC) Brigade International Financial Center in GIF City, Gujarat.

As demonstrated in our investor presentation, our real estate has been growing at a CAGR of 43% over last three years. As of 31st March '21, Brigade had approx. 18 mn.sq.ft. of ongoing projects and 1.43 mn.sq.ft. of upcoming projects and we are confident to maintain this run rate in future as well.

We also saw a decent uptick in hospitality performance from September 2020. We have broken even in terms of operation in 8 Hotels with average portfolio occupancy increasing to 43% in Q4 FY’21 from 27% in Q3 FY’21. GOP margin stood at 22% for the quarter. Company is confident of mitigating the impact of the second lockdown by strict monitoring of cost and plugging in deficiency if any.r.in Hospitality Segment.

Debt : debt position, there was a reduction of Rs.195crores in real estate debt which was driven by higher sales and collections for FY21. The cash and cash equivalents stand at Rs.726 crores as on March 31st 2021 which is one of the highest company has had. Consequently, Company’s net debt outstanding as on March 31st, 2021 is Rs.3,574 crores, out of which Brigade’s share is Rs.2,654 crores. 75% of the total debt pertains to commercial portion, of which 65% is backed by the rental income.

Chennai : two projects; Xanadu in West Mogappair and WTC Residences

new launches for last quarter contributed about 30% of the total sales by value.

Trigger : As far as commercial segment is concerned, we feel that there is a significant amount of latent demand because of the robust hiring that is going on in IT, ITES sector plus the sector is also growing.

two new launches: El Dorado, North Bangalore and Utopia in East Bangalore

August 21 https://www.bseindia.com/xml-data/corpfiling/AttachHis/9b30eca3-40e7-49b9-8f50-b8ee5c03b2b5.pdf

active pipeline that we are having currently is 1.5 million and out of this 0.8 million is a Brigade Tech Gardens, 0.5Mn approximately would be for WTC Chennai, 0.1 Mn is at BIFC, Ahmedabad and rest all together is 0.1 Mn approximately

price increases we took about 2% to 3% price increase at the first time, so clearly there is the pressure on costs due to increase in cost of commodities like steel and other metals,

Collections : collection of 557 Crores in real estate, commercial lease was 94 Crores, retail was 12 Crores, hospitality 31 Crores and PMS which is our management company it was 23 Crores so this total up to 717 Crores.

size of Bengaluru market: Bengaluru market in terms of unit sales is about 40000 to 45000 units a year

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Brigade Group to develop 1.4 mn sq ft commercial project in Bengaluru, expected to generate Rs 100 Cr annual lease income with Rs 750 Cr investment. Prime location on Airport Road, NH 44.

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Brigade Enterprises Q1 FY25 Analysis: Key takeaways!!

Brigade Enterprises reported solid performance in Q1 FY2025, driven primarily by its real estate segment. The company achieved real estate sales of 1.15 million square feet with a sales value of INR 1,086 crores at an average realization of INR 9,483 per square foot, which is their highest to date. This reflects strong demand for premium properties with spacious layouts and high-end amenities. The company’s multi-domain approach across residential, commercial, hospitality, and retail segments positions it well to capitalize on various market opportunities.

Strategic Initiatives:

  1. Diversification: Brigade continues to maintain a balanced portfolio across real estate, commercial leasing, hospitality, and retail segments.
  2. Premium Focus: The company is launching luxury projects like Insignia and Brigade Icon to tap into the growing high-end market.
  3. Commercial Expansion: Brigade is actively expanding its commercial portfolio with several ongoing and upcoming projects.
  4. Skill Development: The company inaugurated the Brigade BCIC Skill Development Academy, showcasing its commitment to corporate social responsibility and addressing industry skill gaps.

Trends and Themes:

  1. Premiumization: There’s a clear trend towards higher-end properties with better amenities and finishes.
  2. Strong End-User Demand: The company noted that end-users remain the largest buyer segment in key mastrong textrkets.
  3. Office Space Revival: Increasing utilization rates are prompting companies to review their leasing strategies for expansion.

Industry Tailwinds:

  1. Robust Housing Demand: Continued strong demand for both new launches and under-construction properties.
  2. Commercial Sector Recovery: GCCs, flex space operators, PFSI, and technology firms are driving leasing activities.
  3. Hospitality Rebound: The hospitality industry is seeing growth, with Chennai and Bengaluru experiencing high year-on-year ARR growth.

Industry Headwinds:

  1. Approval Delays: The recent elections caused some slowdowns in project approvals.
  2. Seasonal Fluctuations: Q1 tends to be softer for both real estate sales and hospitality compared to Q4.
  3. Increasing Competition: Particularly noted in the Mysore hospitality market.

Analyst Concerns and Management Response:

  1. Q1 Sales Dip: Management clarified that Q1 typically sees lower sales compared to Q4, which is an industry-wide trend.
  2. Hospitality ARR: While occupancy improved, ARR remained stagnant. Management explained their strategy of balancing occupancy and ARR growth.
  3. Launch Pipeline: The company reaffirmed its guidance of INR 10,000-11,000 crores worth of launches for the year, with a skew towards the second half.

Competitive Landscape:
Brigade’s focus on premium projects and diversified portfolio helps differentiate it from competitors. The company’s strong brand presence in South Indian markets, particularly Bangalore, provides a competitive edge.

Guidance and Outlook:
The company maintained its previous outlook on project launches. Management expects the launch trajectory to remain similar to previous quarters, with more activity in the second half of the fiscal year.

Capital Allocation Strategy:
Brigade continues to invest in land acquisitions and new project launches across segments. The company maintains a balanced approach between residential, commercial, and hospitality investments.

Opportunities & Risks:

Opportunities:

  1. Luxury Segment: Growing demand for premium properties offers scope for high-value projects.
  2. Commercial Expansion: Ongoing recovery in office leasing presents growth potential.
  3. Geographic Expansion: The company is expanding its presence in markets like Chennai and Hyderabad.

Risks:

  1. Economic Slowdown: Any major economic downturn could impact demand across segments.
  2. Regulatory Changes: Real estate sector is subject to frequent regulatory changes that could affect operations.
  3. Interest Rate Sensitivity: The real estate market is sensitive to interest rate fluctuations.

Regulatory Environment:
The recent announcement of indexation benefit for capital gains on realty investments is seen as a positive move for the sector.

Customer Sentiment:
Customer sentiment appears strong, with continued demand for both residential and commercial properties. The trend towards premiumization indicates customer willingness to invest in higher-quality projects.

Top 3 Takeaways:

  1. Strong demand for premium residential properties driving record-high realizations.
  2. Diversified portfolio strategy, helping capitalize on opportunities across real estate segments.
  3. Expanding commercial portfolio with significant upcoming launches to drive future growth.

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