HDFC Securities Report on Brigade Enterprises (4QFY18)

Gross consolidated debt of Bengaluru headquartered builder Brigade Enterprises LtdNSE 2.30 %. (BELNSE -3.15 %) has decreased by Rs 85.3 crore to Rs 2080 crore in the third quarter of current financial year, according to a recent report by HDFC Securities. “The key reason for the sharp decrease was Rs 1,225 mn reduction in residential debt. Hospitality and lease rental debt increased by Rs 287/85mn respectively,” said Parikshit D Kandpal analyst HDFC securities in a recent report on the company. However, despite a stable financial metric, the broking agency remains cautious about BEL’s debt levels. The company not only has Rs 4 billion unpaid land dues, but also pending capex amounting to Rs 5.2 billion to be incurred on under construction leased assets. “Additionally, a plan to develop 3mn sq ft of new assets will be capex intensive (Rs 6 billion) and put pressure on the balance sheet,” said Kandpal. According to HDFC securities, BEL’s ongoing projects are expected to deliver Rs 27.5bn in pre-tax cash flows. Sales velocity is key to manage capex outlay, office space has been witnessing strong traction, and the realty market in Bangalore is stabilising post demonitisation.