Brigade Enterprises soars 13% on healthy outlook; zooms 60% since November

Shares of Brigade Enterprises (BEL) rallied 13 per cent to hit a new high of Rs 983.65 on the BSE in Thursday’s intra-day trade on a healthy business outlook.

Since November, the stock of the real estate company has zoomed 60 per cent as it had reported a strong operational performance for the September quarter (Q2FY24).

BEL posted a 117 per cent year-on-year (YoY) increase in net profit at Rs 112.50 crore for Q2FY24 on the back of strong new bookings of 1.67 million square feet valued at Rs 1,249 crore. This was up 23 per cent YoY.

With a robust pipeline of launches in Bengaluru, Chennai and Hyderabad, the management is confident that the company will sustain the momentum going forward.

At the time of results, it said all business verticals contributed significantly to the growth in Q2FY24. The residential segment continued to outperform with strong absorption across key markets, heightened end-user interest, stable registration processes, steady home loan rates, and excellent response to new launches.

Driven by BEL’s established market position and healthy launch pipeline, the performance of the residential segment is expected to remain healthy with sales expected to be in the range of 6.5-7.5 million sq ft (msf) in FY24, similar to FY23, according to CRISIL Ratings.

Rental income from the commercial segment is also expected to increase with 2 under construction commercial assets becoming operational in a phased manner from next fiscal onwards.

Additionally, there is 1 under construction asset in the hospitality segment which is also expected to contribute to incremental growth post its operationalization.

Diversity and stability of business risk profile of BEL is expected to strengthen further with increase in rental and hospitality revenues, backed by expected increase in occupancies and sustenance of demand in the hospitality segment, the rating agency said in a report dated Dec 29, 2023.

CRISIL Ratings believes the credit profile of Brigade group will remain healthy over the medium term, driven by its established market position.

Financial risk profile is also likely to remain healthy, aided by low leverage of the residential business, limited commercial capex and cap on leveraging the leasing business, it said.