Brigade Enterprises launch pipeline supports pre-sales growth despite subdued first quarter

Investment View and Target Price

Prabhudas Lilladher maintained its BUY rating on Brigade Enterprises in its August 17, 2026 Q1FY27 result update, with a target price of Rs 785 per share. The positive view is supported by a healthy launch pipeline of about 10 million sq ft, expansion into Chennai and Hyderabad, growing annuity income, and the ability to fund business development and capital expenditure through operating cash flows and a comfortable balance sheet.

The broker expects residential pre-sales to grow at a 12-15 per cent CAGR over FY26-FY28E. Brigade Enterprises delivered a 22 per cent pre-sales CAGR over FY23-FY26, supported by new launches, entry into new markets and premiumisation, while annuity income rose 20 per cent during the same period.

The target price is based on a NAV valuation comprising residential NAV of Rs 95.8 billion, commercial lease NAV of Rs 85.9 billion, retail lease NAV of Rs 20.5 billion and hospitality NAV of Rs 30 billion, adjusted for cash, gross debt and land payments. Prabhudas Lilladher applies a 20 per cent premium to NAV to derive the target price of Rs 785.

Q1FY27 Operating and Financial Performance

Q1FY27 residential pre-sales declined 5 per cent year-on-year and 58 per cent quarter-on-quarter to Rs 10.6 billion, or 0.74 million sq ft, as there were no residential launches during the quarter. Bengaluru contributed 58 per cent of residential pre-sales, Chennai 28 per cent and Hyderabad 14 per cent.

Average price realisation increased 22 per cent year-on-year to about Rs 14,338 per sq ft, including plotted development projects. Collections increased 7 per cent year-on-year but declined 6 per cent sequentially to Rs 18.6 billion.

Residential Launch Pipeline and Guidance

Management reiterated its FY27 pre-sales guidance of Rs 90 billion. The residential pipeline stands at 12.4 million sq ft with about Rs 134 billion of gross development value. Of this, 9.36 million sq ft carrying about Rs 100 billion of gross development value is planned for launch during the remainder of FY27.

FY27 launch guidance was reduced to about 9.3 million sq ft from 11.5 million sq ft previously, partly because Morgan Heights was excluded from the launch pipeline following the revocation of its environmental clearance. The project relaunch remains stalled. About 0.7 million sq ft, with Rs 6.5 billion of attributable value, remains in unsold inventory and may be removed if the issue remains unresolved.

Management expects real estate margins to improve from the high teens to the low twenties by year-end. Brigade Enterprises added Rs 240 billion of gross development value across 2.7 million sq ft of residential projects in Q1FY27, largely in Hyderabad.

Annuity, Hospitality and Balance Sheet

Leasing income rose 9 per cent year-on-year to Rs 3.3 billion, with leasing EBITDA of Rs 2.3 billion. Management expects office leasing revenue to grow at about a 20 per cent CAGR over the next five to six years, supported by 11.5 million sq ft of upcoming supply and about 0.9 million sq ft of vacant lease-up potential.

Hospitality revenue increased 2 per cent year-on-year to Rs 1.44 billion. Management reported ARR growth of 7 per cent, occupancy of 76.5 per cent and a 140 per cent rise in hospitality PAT to Rs 170 million. Event cancellations related to the West Asia conflict affected about 10 per cent of the hospitality business.

Net debt adjusted for joint ventures declined by Rs 1.4 billion sequentially to Rs 15.4 billion. Management intends to maintain leverage below 1x and fund capital expenditure and business development largely through internal accruals.

Broker Estimate Changes

Key Risks

• Launch delays and the unresolved environmental-clearance issue at Morgan Heights.
• Potential macroeconomic effects from the Middle East conflict and AI-led disruption.
• Deferred large-ticket leasing at WTC Bengaluru.