20 June 2019
TP: INR316 (+27%)
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New launches to drive robust growth
Expect 3.6msf of pre-sales and 3msf of pre-leasing in FY20
We recently interacted with BRGD’s management to understand the progress of its two
key commercial assets and its growth strategy for FY20.
As outlined in our Initiating Coverage report dated 24 Dec 2018, BRGD appears all
set for a
in its portfolio with a clear focus on scaling up the high-
potential leasing business. In FY19, leasing operations contributed 11% to revenues,
which we expect should increase to 26% by FY21.
BRGD is on track to complete the BTG Bengaluru and WTC Chennai projects by
Dec’19. It has already pre-leased 0.6msf between BTG and WTC in FY19. We expect it
to achieve 3msf of pre-leasing in FY20 comprising mainly WTC Chennai and BTG
Thus, we expect BRGD’s leasing revenue to grow at 28% CAGR to INR6.7b in FY23
from INR2.4b in FY19 and in the residential segment, we expect BRGD to achieve
booking value of INR19b (up 16%) in FY20 and INR23b (up 21%) in FY21.
We expect BRGD to achieve pre-sales of 3.6msf (v/s management’s estimate of 4msf)
in FY20 and 4.2msf in FY21, aided by its ongoing but unsold inventory of 7.4msf and
new launches of 4.4msf (BRGD’s share). Thus, BRGD will be equipped with 11.8msf of
residential projects to achieve its targeted sales. In 1QFY20, the company launched
1msf Brigade El Dorado (total potential of 5.5msf) located in Huvinayakanahalli,
Debt will continue to rise, but towards building significant leasing assets. Of the total
commercial debt of INR21.3b, INR12.5b is secured against lease rentals, which
We have valued BRGD on SOTP basis. Its leasing portfolio contributes 50% of our GAV
estimate. We are particularly enthused with the ongoing traction in pre-leasing and
residential sales. We maintain our PT at INR316. Maintain Buy.
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
33.3 / 0.5
268 / 157
Financials Snapshot (INR b)
FY19 FY20E FY21E
EPS Gr (%)
159.4 175.3 188.9
Shareholding pattern (%)
Mar-19 Dec-18 Mar-18
FII Includes depository receipts
Stock Performance (1-year)
Sensex - Rebased
Expect robust growth in 1QFY20, need aggressive new launches to achieve
BRGD is likely to deliver robust pre-sales growth in 1QFY20 backed by its new
launch El-Dorado, continued traction in Utopia and thrust on liquidation of
completed inventory. The company is offering high value proposition in El-Dorado
by offering compact 3BHKs for INR45lac under the affordable housing scheme; the
project also qualifies for 1% GST. We believe this will drive robust growth (our
estimate of >100%) in 1QFY20 on a base of 0.43msf. It further plans to launch
Brigade Utopia Phase II of ~1msf, Brigade Citadel (Hyderabad) of 0.8msf, Brigade
Xanadu Phase II of 0.8msf, and WTC Residency (Chennai) of 0.6msf. Another 3.9msf
will be launched through multiple small and large projects in Bengaluru in FY20.
The company had an opening inventory of 7.4msf as at Mar’19, and it announced
new launches of 4.4msf (BRGD’s share), taking the total inventory to 11.8msf for
FY20. Management’s target of achieving 4msf (34% of total) pre-sales seems a bit
stretched, and we believe that BRGD will have to announce more new launches to
achieve the target. New launches should drive pre-sales growth; we expect BRGD
to achieve pre-sales of 3.6msf/4.2msf in FY20/FY21 and booking value of INR19b/
INR23b in FY20/FY21. BRGD achieved pre-sales of 3msf and booking value of
INR16.4b in FY19.
Chintan Modi- Research analyst
(Chintan.Modi@MotilalOswal.com); +91 22 6129 1554
Lopa Thakkar- Research analyst
(Lopa.Thakkar@motilaloswal.com); +91 22 6129 1548
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.