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
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.