Motilal Oswal Reiterates Buy On Midcap Real Estate Stock, Target Price Rs 750

Motilal Oswal Financial Services recently met the management of Brigade Enterprises Ltd. (BEL) to understand the business outlook. Following the meeting, the brokerage reiterates its buy on BEL with an unchanged SOTP-based target price of Rs 720 per share. According to the brokerage's estimated target price, the stock is likely to give 26% return if purchased at the current market price. BEL is a midcap real estate sector company. The company has a market cap of Rs 13,224.41 Crore.

Valuation and view; Residential segment can witness further re-rating

Motilal Oswal Financial Services Said, "We maintain our estimates across the residential and commercial segment as the company reiterated its 15-20% volume growth guidance in the residential segment and remains confident of fully leasing its commercial segment by FY24. We derive a value of INR66b for its commercial business (INR5.8b EBITDA valued at 8.5% cap rate) and INR26b for its hospitality business (INR1.5b EBITDA at 15x EV/EBITDA). Thus, the current EV of IRN147b implies INR55b value for its residential business, while its existing pipeline is valued at INR40b or 37% premium to NAV."

It added, "We believe that an increase in business development activities, especially in Hyderabad, will contribute to additional growth visibility for BEL. This, in turn, could result in a re-rating of the valuation for its residential segment. We value the residential segment at INR87b based on DCF-methodology. We reiterate our BUY rating with an unchanged SOTP-based TP of INR720, implying a 24% upside potential."

Stock Movement

The shares of BEL closed 0.78% down at Rs 573 apiece on BSE. It traded at an intraday of Rs 578 and an intraday low of Rs 566.65. The stock touched its 52-week high at Rs 607.95 apiece and 52-week low at Rs 430.95 apiece, respectively.

The stock surged 0.94% in 1 week, 4.98% in 1 month, and 11.78% in 3 months, respectively. In 1 year, it surged 19.76%. While in 2 and 3 years, it surged 27.75% and 75.81%, respectively. It gave 82.71% positive return in 5 years and 230.94% positive return in 10 years.

Disclaimer

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