Brigade Enterprises H2FY27 launches and office expansion support growth outlook

Investment View and Growth Outlook

Prabhudas Lilladher maintained its BUY rating on Brigade Enterprises Ltd in its November 2, 2026 Q2FY27 result update, while reducing the target price to Rs 700 per share from Rs 785. The broker believes that a substantial H2FY27 launch pipeline, expansion into Chennai and Hyderabad, growing annuity income and a comfortable balance sheet can support growth.

Brigade Enterprises delivered a 22 per cent pre-sales CAGR from FY23 to FY26, driven by launches, entry into new markets and premiumisation. Prabhudas Lilladher expects residential pre-sales to grow at a 10 to 12 per cent CAGR over FY26 to FY28E.

Residential Pre-sales and Launch Pipeline

Q2FY27 residential pre-sales declined 10 per cent YoY to Rs 1,827 crore, below the broker's estimates, although they rose 72 per cent QoQ from a low Q1 base. Sales volume was 1.32 million square feet, and new launches accounted for 34 per cent of quarterly pre-sales. Barcelona in Hyderabad, Misty Green in Mysore and Meadows contributed to sales.

H1FY27 pre-sales declined around 8 per cent YoY to Rs 2,890 crore, with 2.06 million square feet sold. Karnataka represented 52 per cent of Q2 residential pre-sales, Telangana 34 per cent and Tamil Nadu 14 per cent. Average price realisation increased 29 per cent YoY to around Rs 13,841 per square foot.

Management reiterated its FY27 pre-sales guidance of Rs 9,000 crore, supported by planned H2FY27 launches of around 7 million square feet worth Rs 7,600 crore.

Q2FY27 Financial Performance

Q2FY27 consolidated revenue declined 14 per cent YoY to Rs 1,196 crore and was 24.1 per cent below the broker's estimate. EBITDA grew 29 per cent YoY to Rs 425 crore, in line with estimates, while EBITDA margin rose to 35.5 per cent from 23.7 per cent in Q2FY26 because of revenue recognition from higher-margin projects.

Reported PAT increased 19 per cent YoY to Rs 194 crore, but was 8.1 per cent below the broker's estimate. In H1FY27, revenue declined 13 per cent YoY to Rs 2,312 crore, EBITDA rose around 21 per cent to Rs 786 crore and margin expanded around 950 basis points to 34 per cent.

Management guided for FY27 real estate margins of 22 to 24 per cent and residential revenue recognition of around Rs 5,000 crore, subject to occupancy certificate and registration timing.

Collections and Annuity Businesses

Collections declined 18 per cent YoY and 12 per cent QoQ to Rs 1,633 crore in Q2FY27. Management expects collections to improve in H2FY27.

Leasing income declined 4 per cent YoY to Rs 329 crore, while hospitality revenue grew 16 per cent to Rs 160 crore with a 37 per cent EBITDA margin. The operational office portfolio was 9.6 million square feet with 90 per cent occupancy. The company targets an office portfolio of around 12.5 million square feet and rental income of around Rs 1,700 crore by FY29.

The retail portfolio reported 94 per cent trading occupancy, and tenant sales grew 16 per cent YoY. Hospitality ARR grew 11 per cent YoY to Rs 7,876, RevPAR grew 10 per cent to Rs 5,922 and occupancy was 75 per cent.

Balance Sheet and Debt

Net debt adjusted for joint ventures increased by Rs 550 crore QoQ to Rs 2,088 crore in Q2FY27. Management stated that 85 per cent of debt is backed by rentals, debt-to-equity was 0.31 times and average borrowing cost was 7.61 per cent.

Management expects debt-to-equity to rise to 0.4 to 0.5 times by FY27-end as it funds growth capex and land acquisitions through internal accruals and debt.

Estimates and Valuation

Prabhudas Lilladher reduced FY28E sales by 2.1 per cent, EBITDA by 0.5 per cent and EPS by 2.3 per cent. It increased FY29E sales by 3.0 per cent, EBITDA by 6.2 per cent and EPS by 5.1 per cent.

The broker's Rs 700 target price is based on a NAV approach. It estimated gross NAV at Rs 22,704 crore, added cash of Rs 2,050 crore, deducted gross debt of Rs 4,200 crore and land payments of Rs 2,300 crore, and applied a 20 per cent premium to NAV.

Key Near-term Concerns

• Weaker H1FY27 pre-sales and collections.
• Revenue below the broker's estimate.
• Increased net debt.
• The need to execute the H2FY27 launch pipeline and planned office expansion.