Brigade Enterprises share hits 6-month high; soars 36% in two months

Brigade Enterprises share hits 6-month high; soars 36% in two months

In the past two months, shares of the Bangalore-headquartered company outperformed the benchmark indices by surging 36 per cent after it reported robust earnings in September quarter.

Shares of Brigade Enterprises touched a six-month high of Rs 219.90, up 6 per cent on the Bombay Stock Exchange (BSE), in an otherwise weak market, following a rating upgrade to "Buy" at Motilal Oswal Securities.

Motilal Oswal Securities on Monday initiated coverage with a "Buy" rating and a Sum-of-the-parts (SOTP)-based target price of Rs 282 (37% upside).

Boosted by the development, shares of the real estate company jumped as much as 6.07 per cent to touch an intra-day high of Rs 219.90 apiece on the Bombay Stock Exchange, against previous closing of Rs 206.45.

In a similar trend, stocks of real estate developer based in south India were trading at Rs 217.35, up 4.90 per cent on the National Stock Exchange.

In the past two months, shares of the Bangalore-headquartered company outperformed the benchmark indices by surging 36 per cent after it reported robust earnings in September quarter. The company had posted 8 per cent growth in its consolidated net profit at Rs 68 crore for the second quarter of FY 2018-19 as against Rs 63 crore recorded in the same period last year.The company's total revenue rose by 19 per cent to Rs 844 crore from Rs 708 crore in the same period last year.

"BRGD appears all set for a tactical shift in its portfolio, with a clear focus on scaling up the high-potential leasing business. The company aims to add ~4msf of leasable area to its portfolio over the next five years. Consequently, we expect a leasing income CAGR (FY18-22) of 27 per cent to Rs 600 crore (up by a significant 2.6x from FY18 levels)," according to a report published by Motilal Oswal Securities.

The rating agency in its report said that the company is now focusing on increasing its leasing and hospitality business, which it believes can act as a key growth catalyst. We have valued BRGD's leasing assets by applying a discounting rate of 13 per cent and a cap rate of 9 per cent - leasing assets contribute 50 per cent of our GAV, it said.

Motilal Oswal Securities opined that BRGD is poised for the next leg of growth with the increase in annuity portfolio.

Edited by Chitranjan Kumar