Brigade Enterprise reports decent earnings in Q2, debt declines

Market


Real estate developer Brigade Enterprise Ltd has made an impressive comeback from the disruption led by the second wave of the coronavirus pandemic. In the September quarter, its residential segment saw robust booking with sales volumes of 1.31 million square feet (msf), up 33% year-on-year (y-o-y). 

Sales value improved by 44% y-o-y to 830 crore. During the quarter, the company launched 0.48msf, while 2.18msf is in the pipeline.

Reacting to the earnings, shares of the company rose 2.5% on the NSE in Friday’s opening trade.

Its rental portfolio is also steadily reviving with revenue rising 64% y-o-y to 136 crore. According to the company’s management, there are strong signs of revival as tenants partially resume office. Revival is supported by increased inquiries, physical site inspections and market closures. While there is demand for larger spaces, mid-sized units are more active in the market, said the management. The overall sales consumption of its retail vertical recovered to 90% of pre-Covid levels of FY20.

Within the hospitality segment, occupancies rose in Q2 FY22 and stood at 45% compared to 23% in Q1 FY22 and average room rate increased by 12% in Q2 FY22, as compared to Q1 FY22.

Another comforting factor for investors in this stock is the company’s collections that were strong at 937 crore, up 75% y-o-y. Operating cash flow at 213 crore, rose 17% y-o-y. As a result, sequentially, its overall gross debt reduced by 93 crore and real estate debt reduced by 122 crore. Net debt declined by around Rs87 crore compared to the previous quarter. Reduction in debt has led to an improvement in the key net debt/equity ratio from 1.27 times in Q2FY21 to 0.83 times in Q2FY22. Further, akin to peers, the company is also witnessing a steady fall in cost of debt from 9.23% in 2QFY21 to 7.94% in 2QFY22.

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