Brigade Enterprises launch pipeline underpins FY27 pre-sales and leasing growth

Investment View and Target Price

ICICI Direct Research retained its BUY recommendation on Brigade Enterprises and revised its sum-of-the-parts based target price to Rs 780. The broker’s positive outlook is supported by the company’s large residential launch pipeline, continued commercial-leasing expansion and healthy hospitality growth.

Residential pre-sales were soft in Q1 FY27, but ICICI Direct expects the segment to return to a growth trajectory from FY27, while the commercial and hospitality businesses continue to grow.

Q1 FY27 Financial and Operating Performance

Brigade Enterprises recorded Q1 FY27 pre-sales of Rs 1,061 crore, compared with Rs 1,118 crore in Q1 FY26 and Rs 2,521 crore in Q4 FY26. Bengaluru contributed 58 per cent of pre-sales, followed by Chennai at 28 per cent and Hyderabad at 14 per cent. Collections increased 7.6 per cent year-on-year to Rs 1,856 crore.

PAT after minority interest was aided by Rs 36.6 crore of exceptional income at the PAT level.

Residential Launch Pipeline and Pre-sales Outlook

Management retained its FY27 pre-sales guidance of Rs 9,000 crore, representing 21 per cent year-on-year growth. Brigade Enterprises plans to launch 12.4 million square feet of residential projects across Bengaluru, Hyderabad, Chennai and Mysuru over the next four quarters. These projects have an estimated gross development value of about Rs 13,400 crore.

Launches are expected to be more back-ended in FY27E. The company added 2.7 million square feet of residential projects, mainly in Hyderabad, with gross development value of Rs 2,400 crore during Q1 FY27.

Including its launch pipeline, Brigade Enterprises’ land bank totals 543 acres with development potential of 57 million square feet. The company’s share of this development potential is 43 million square feet.

Commercial Leasing and Hospitality Growth

Commercial leasing is a major growth driver in ICICI Direct’s investment thesis. Brigade Enterprises launched about 4 million square feet of commercial projects in Q1 FY27 and has 7.15 million square feet of ongoing commercial projects. These projects require committed capex of about Rs 4,814 crore, of which Rs 1,216 crore had been incurred.

Management expects 2.9 million square feet of commercial space to come to market in FY28, 0.7 million square feet in FY29 and 6 million square feet in FY30. It has guided for leasing income to grow at about 20 per cent CAGR over the next four to five years from FY26 rental income of Rs 765 crore. Planned capex for this period is about Rs 6,000 crore over four years.

Q1 FY27 leasing revenue increased 9 per cent year-on-year to Rs 328 crore. Growth was supported by an 11 per cent increase in retail footfalls and 35 per cent growth in retail sales consumption.

Hospitality occupancy stood at 76 per cent, while the average room rate was Rs 7,241, up 7 per cent year-on-year. Hospitality revenue increased 3 per cent to Rs 145 crore. The company has 1,700 hotel keys in its pipeline.

ICICI Direct Financial Forecasts

Sum-of-the-Parts Valuation

The target valuation is based on a sum-of-the-parts approach. ICICI Direct’s valuation comprises residential NAV of Rs 441 per share, leasing-portfolio value of Rs 338 per share and hospitality-portfolio value of Rs 55 per share, less Brigade Enterprises’ effective net debt of Rs 51 per share.

Key Risks

• Project-execution risk: Delays or challenges in executing the residential, commercial or hospitality pipeline could affect growth.
• Macroeconomic and regulatory risk: Changes in economic conditions or regulations could adversely affect the business.
• Morgan Heights project: The project remains affected by revoked environmental clearance. Affected buyers have been refunded, the matter is before the High Court, and Brigade Enterprises intends to relaunch the project once the issue is resolved.