1,100% return in 10 years! Analysts bet big on this multibagger, see up to 42% upside

Shares of Bengaluru-based realtor Brigade Enterprises have delivered multibagger return to its long-term investors, as the scrip has soared a whopping 1,136 per cent in the last 10 years to Rs 507.35 apiece today against Rs 41.03 level, a decade ago.

The scrip, which hit a 52-week low of Rs 385.25 on May 12 and a 52-week high of Rs 585 on September 15, is trading 13 per cent below its recent high.

Select brokerages are bullish on the stock and see up to 42 per cent upside potential for this multibagger.

Motilal Oswal expects a further scale-up in the residential business, as the Brigade management monetises its 35 million square feet (msf) land bank over the next five-to-six years.

“Over the last four years, Brigade has scaled up all facets of its business through a revamped Residential strategy, and aggressive capex in its Commercial business, which is now bearing fruit,” it said.

Motilal Oswal expects rental income for Brigade Enterprises to register a 15 per cent CAGR over FY22-24 to Rs 750 crore on the back of a recovery in leasing. This brokerage house has resumed coverage on the stock with a ‘Buy’ rating and a target price of Rs 720, implying a potential upside of 42 per cent. 

Shares of Brigade Enterprises command a market capitalisation of more than Rs 11,000 crore and are trading above their 100-day and 200-day moving averages. The scrip, however, is trading below its short-term (20-day and 50-day) moving averages.

ICICI Securities retained its ‘Buy’ rating on the stock with a target price of Rs 595 per share.

This brokerage said that FY22 was a challenging year for Brigade Enterprises, with Covid impacting the leasing and hospitality segments in the first half of the financial year.

Yet the company clocked a resilient performance with FY22 residential sales of 4.7 msf estimated at Rs 320 crore (up 9 per cent YoY in value terms). Besides, the company also managed to reduce its share of net debt by Rs 900 crore YoY to Rs 1,750 crore as of March 31, aided by a QIP fund raise of Rs 500 crore in the March quarter of FY22.

Brigade Enterprises valuations look attractive, said Edelweiss Wealth Research.

An aggressive residential launch pipeline, strong brand perception in the primary market; and robust portfolio of operational retail, commercial and hotel assets are expected to fuel the company’s growth story, the brokerage said in a note.

“Given significant improvement in the fundamentals of the commercial and retail segments, we expect a nearly 95 per cent occupancy and hike in rental rates across the company’s annuity portfolio in the next 3-4 years. The hotel sector is expected to advance significantly, led by the opening up of the economy and the resumption of corporate events and travel. Furthermore, the swift recovery in the hotel sector and improving occupancy and room rates will support earnings growth,” Edelweiss said.

The brokerage has initiated coverage on the realty stock with a target price of Rs 633 based on 1 time FY24E NAV. The company reported a consolidated net profit of Rs 87.68 crore for the June quarter on strong sales.

It posted a net loss of Rs 40.09 crore in the year-ago quarter last year. Total income jumped more than two folds to Rs 920.28 crore in the June quarter compared with Rs 391.52 crore in the corresponding quarter of last year.

Brigade Group’s sales bookings rose 70 per cent annually to Rs 813.9 crore in the first quarter of this fiscal on better housing demand. The sales bookings of the Bengaluru-based developer stood at Rs 480 crore in the year-ago period.