Brigade Enterprises

Update on the Indian Equity Market:
On Friday, NIFTY closed in red at 14,433 (-1.1%). Top gainers in NIFTY50 were Tata motors (+6.6%), Bharti Airtel (+3.9%), and UPL (+2.6%). The top losers were Tech M (-3.9%), HCLT (-3.7%), and Wipro (-3.6%). The top sectoral losers were IT (-2.2%), PSU BANK (-2.1%), and REALTY (-1.8%) and there were no sectoral gainers.

Excerpts of an interview with Mr M. R. Jaishankar, CMD – Brigade Enterprises with CNBC TV18 dated 14th January 2021:
• They have fully recovered. In fact, they have exceeded whatever sales they did in Q3 FY20 and in Q2FY21.
• The sales, in general, have been robust. On an overall basis, across India, there is about a 25 per cent drop in sales as compared to the previous financial year. The recovery is quite fast and the worst is over for real estate.
• He expects a 4-5 per cent increase in home prices due to steel price hikes.
• There are a few dampeners like 50 percent jump in steel price and few metal prices which are required in real estate – aluminum, copper, and the petroleum prices which has an impact on PVC products. All this has some dampener effect on the cost.
• The demand for rentals is down 40 per cent compared to last year, but enquiries have gone up substantially in the past 4-6 weeks.
• Looking at the last 9 months, the demand has certainly come down by maybe about 40 percent as compared to the previous calendar year which is what rentals are generally being assessed on calendar year basis by international property consultants.
• Now with US elections behind and with the finance minister promising a fantastic budget – also enquiries have gone up substantially in the last 4-6 weeks and with the IT sector continuing to do very well, the outlook for 2021 and 2022 should be bright.

Consensus Estimate: (Source: market screener and investing.com websites)
• The closing price of BRIGADE was ₹ 264/- as of 15th January 2021. It traded at NM/ 30x/ 23x the consensus earnings estimate of ₹ -0.7/ 8.9/ 11.7 for FY21E/FY22E/23E respectively.
• The Consensus price target of BRIGADE was ₹ 250/- as of 15th January 2021 which is 22x of FY23E EPS estimate of ₹11.7.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”