Brigade Enterprises signs JDA for residential project in Chennai; stk up 6%

The Joint Development Agreement is for a large residential township development project at Perumbakkam, which is one of the fast-emerging residential hubs in Chennai

Shares of Brigade Enterprises surged 5.8 per cent to Rs 467 apiece on the BSE, in an otherwise weak market, on Tuesday after the company announced signing of a Joint Development Agreement to develop around 2.1 million square feet in Chennai. At 9:30 AM, shares of the real estate player were ruling 4.5 per cent higher at Rs 461 as against a 0.65 per cent dip in the benchmark S&P BSE Sensex.  

The JDA is for a large residential township development project at Perumbakkam, which is one of the fast-emerging residential hubs in Chennai, witnessing increasing infrastructure development. 

"South India will continue to be a key focus for us, and this project is part of our strategy to expand our presence in Chennai. The project will have a revenue realisation of over Rs 1,500 crores in about five years," said Pavitra Shankar, Executive Director and Head of Residential Business at Brigade Enterprises.

Brigade Group is targeting a revenue of about Rs 6,000 crore over the next five years from its Chennai residential business, alone. Further, as part of its consolidation plans in Chennai, the Group is expanding its presence in the Residential, Commercial and Retail verticals, the company said. 

According to Elara Capital, Brigade Enterprises' residential sales has seen a scaleup since FY20, owing to right pricing and location of new launches with a ticket size of Rs 0.4-12.0 million where demand remains healthy. They believe company has a growing annuity income portfolio, which is likely to get a boost in the next 12-18 months, given the rich launch pipeline and stable real estate (housing) market. 

The company is set to launch a series of projects by Q2FY23 by adding residential space of 1.0-1.5 million sq ft at Hyderabad, 4.0-6.0mn sqft at Chennai, which will be a combination of residential & commercial and the rest at Bengaluru. Brigade expects 20 per cent plus growth in sales volume for FY23 based on such a robust pipeline. We reiterate Buy with a target of Rs 515," they said.

Brigade Enterprises Ltd. is one of India's leading property developers with 35 years of expertise. Brigade has developed many landmark buildings and transformed skylines across South India in the cities of Bengaluru, Mysuru, Hyderabad, Chennai, and Kochi with developments across Residential, Office, Retail, Hospitality, and Education Sectors. 

For January-March quarter of FY22 (Q4FY22), the company reported a net consolidated loss of Rs 11.63 crore as against a profit of Rs 19.58 crore in the corresponding quarter of previous fiscal.

The company's total consolidated income stood at Rs 964.72 crore in Q4, up 18 per cent from Rs 820.86 crore it recorded in the similar quarter last year. This was accompanied by very strong and consistent cash flows aiding reduction in net debt to Rs 2,540.3 crore, down by 9 per cent QoQ. The net debt to equity stood at 0.71x in Q4FY22 compared to 0.77x in Q3FY22.

"The results showed continuation of volume momentum in residential sales, optimism in office rentals with leasing of 0.4 million sq ft amid strong growth in enquiries, revival in retail malls with 85 per cent of the tenants showing sales at more than 85 per cent of pre-Covid levels and pick-up in business activities of F&B and multiplex, and strong revival in the Hospitality business," highlighted Nirmal Bang Institutional Equities in a result review report.

The brokerage has a 'Buy' rating on the stock with a target price of Rs 565.