Momentum intact Brigade Enterprises :: HDFC Securities

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->
Momentum intact Brigade Enterprises’ (BRGD) 3QFY15 consolidated PAT of Rs 277mn (up 21% QoQ and 81% YoY) was ahead of our estimate of Rs 230mn owing to higher recognition of revenues from Cosmopolis Phase I project that hit revenue recognition during the quarter. Sales momentum remained strong with 3QFY15 bookings of 0.81msf worth Rs 4.2bn (up 15% YoY and 2% QoQ) owing to strong response for Northridge Phase I project at Orchards, Bengaluru. Rental and hospitality assets reported stable operating performance. We believe that BRGD’s ready portfolio of marquee rental and hospitality assets in Bengaluru makes BRGD an excellent proxy for a revival in the Bengaluru rental market over the next three years. We estimate BRGD's EV from rental and hotel projects at Rs 30.0bn (Rs 267/sh). We estimate the equity value of these assets at Rs 19.7bn (Rs 176/sh) that is higher than BRGD's CMP of Rs 170/sh. We reiterate BUY with a TP of Rs 253/sh. Key upside triggers are addition of more land parcels through the 50:50 JV tie-up with GIC to cumulatively invest ~Rs 15bn (Rs 7.5bn each) across South India and value accretion from Rs 5bn of committed investment in GIFT City, Gujarat. Strong portfolio of ready operational assets  We estimate the EV of BRGD's rental and hotel projects at Rs 30.0bn (Rs 267/sh). BRGD's rental assets correspond to an EV of Rs 22.9bn (Rs 204/sh) at a cap rate of 9% and BRGD's hotel portfolio is valued at an EV of Rs 7.0bn (Rs 63/sh, 9x FY17E EV/EBITDA). After deducting net debt of Rs 10.2bn in FY16E, we estimate the equity value of these assets at Rs 19.7bn (Rs 176/sh). Rental income to grow to Rs 2.0bn by FY17E  We expect BRGD's net rental income to grow from Rs 1.3bn in FY14 to Rs 2.1bn in FY17E owing to ramp up in occupancies and renegotiation of rentals across these properties.

LINK
http://www.hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3011081