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Brigade Enterprises
Neutral ; BRIG.BO, BRGD IN
3QFY11 results boosted by asset sales
• 3Q results boosted by asset sales. However, operational results
disappoint – Brigade reported 3QFY11 net income of Rs581M (+191%
Q/Q, +880% Y/Y) and revenues of Rs1.4B (+18%Q/Q, +121%Y/Y).
Revenues/PAT for 3Q was boosted by asset sales (Columbia Hospital).
While the property was sold in 2Q to a HNI for Rs1.3B in 2Q (at a yield of
7.5%); the transaction got concluded during last quarter. Adjusted for this,
the company made no money on residential operations in 3Q due to few
cancellations in the Gateway project. Further, revenue recognition from new
sales in 3Q (0.4msf) remained minimal as billings on these got deferred to
4Q. Net debt (Rs6.7B) during the Q declined by Rs600MM aided by cash
inflows from asset sales.
• Residential sales see an encouraging pick up. However, new launches
hold the key for volumes to sustain. Brigade sold 0.4msf/Rs1.2B in Dec-Q
(vs. 0.2msf in 2Q) thereby taking 9M booking to 0.7msf/Rs2.5B (vs. JPMe
FY11 bookings of Rs3.8B). While sales over the last 2-3 years have been
primarily across its recently completed township projects; new launch
activity remained muted in 3Q on account of approval delays. With this, the
company has only 0.5msf of unsold inventory and hence the progress on
new launches remains critical for the sales momentum to sustain. Overall
the company is looking to launch 9msf over FY11/12 including two
township projects in Devanhalli and Kanakpura.
• Leasing activity improving at the margin– Overall leasing has seen a
decent momentum over the last Q with incremental 0.3msf being leased
across North Star (WTC) and Summit I/II. Management indicated that
enquiries over the last Q have been quite robust and expects additional
0.5msf to be concluded over 4Q/1QFY12. These commercial properties
(3msf) in the township projects have been handed over for fit outs to the
tenants and are expected to be operational by Mar end. As of date, close to
40% of the area (~1msf) has been leased across these projects.
• Strata sales could further boost cash flows/earnings in FY12:
Management indicated that they are in discussions to sell part of its
commercial buildings at Gateway/Metropolis projects. Overall, the company
is looking to raise around Rs3B in FY12 via asset sales, which would be
used primarily to repay debt.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Brigade Enterprises
Neutral ; BRIG.BO, BRGD IN
3QFY11 results boosted by asset sales
• 3Q results boosted by asset sales. However, operational results
disappoint – Brigade reported 3QFY11 net income of Rs581M (+191%
Q/Q, +880% Y/Y) and revenues of Rs1.4B (+18%Q/Q, +121%Y/Y).
Revenues/PAT for 3Q was boosted by asset sales (Columbia Hospital).
While the property was sold in 2Q to a HNI for Rs1.3B in 2Q (at a yield of
7.5%); the transaction got concluded during last quarter. Adjusted for this,
the company made no money on residential operations in 3Q due to few
cancellations in the Gateway project. Further, revenue recognition from new
sales in 3Q (0.4msf) remained minimal as billings on these got deferred to
4Q. Net debt (Rs6.7B) during the Q declined by Rs600MM aided by cash
inflows from asset sales.
• Residential sales see an encouraging pick up. However, new launches
hold the key for volumes to sustain. Brigade sold 0.4msf/Rs1.2B in Dec-Q
(vs. 0.2msf in 2Q) thereby taking 9M booking to 0.7msf/Rs2.5B (vs. JPMe
FY11 bookings of Rs3.8B). While sales over the last 2-3 years have been
primarily across its recently completed township projects; new launch
activity remained muted in 3Q on account of approval delays. With this, the
company has only 0.5msf of unsold inventory and hence the progress on
new launches remains critical for the sales momentum to sustain. Overall
the company is looking to launch 9msf over FY11/12 including two
township projects in Devanhalli and Kanakpura.
• Leasing activity improving at the margin– Overall leasing has seen a
decent momentum over the last Q with incremental 0.3msf being leased
across North Star (WTC) and Summit I/II. Management indicated that
enquiries over the last Q have been quite robust and expects additional
0.5msf to be concluded over 4Q/1QFY12. These commercial properties
(3msf) in the township projects have been handed over for fit outs to the
tenants and are expected to be operational by Mar end. As of date, close to
40% of the area (~1msf) has been leased across these projects.
• Strata sales could further boost cash flows/earnings in FY12:
Management indicated that they are in discussions to sell part of its
commercial buildings at Gateway/Metropolis projects. Overall, the company
is looking to raise around Rs3B in FY12 via asset sales, which would be
used primarily to repay debt.
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