>BRIGADE ENTERPRISES (CENTRUM)

Liquidity intact, maintain Buy

■ Lacklustre results: Q4 revenues plunged 68% YoY to Rs426mn and PAT declined 27% to Rs156mn owing to higher operating expenses. Although the company reported loss before tax of Rs89mn, exceptional items representing prior period items and excess tax provision resulted in adjusted PAT of Rs156mn.

■ Core business still under strain: Low off-take in new apartment sales of its Gateway and Metropolis projects targeted at premium segment and weak leasing activity of commercial and retail space in Bangalore continues to be a cause for concern.

■ PAT estimates revised: We have retained our revenue and EBITDA estimates, but lowered our PAT estimates by 4.5% for FY10 and 5.5% for FY11 owing to higher tax rate and lower
other income.

■ Affordable housing and hotels hold long-term potential: Brigade intends to launch affordable housing projects in Bangalore and Mysore with flats priced up to Rs2mn and plans to launch ~8-10mn sq ft of projects in FY10. Further, its hotel at Gateway is also expected to become operational in CY10.

■ Maintain Buy with target price of Rs107: Our FY10E NAV has increased to Rs119 from Rs96 earlier due to balance sheet and project level adjustments. We have included NAV from ongoing projects with remaining land bank taken at book value. We are providing 10% discount to NAV compared to 50% earlier to reflect easing sector liquidity concerns but remain cautious on the commercial and retail space. We maintain our Buy rating with target price of Rs107.

To see full report: BRIGADE ENTERPRISES