Kotak Institutional Equities has issued a decisive BUY call on Brigade Enterprises (BRGD), underscoring expansive development, attractive valuations, and resilience across its portfolio. Despite a transient dip in pre-sales, the research house remains bullish, setting a revised Fair Value of Rs1,300 per share with robust sector prospects. This report expertly distills Brigade's multifaceted journey—from operational pivots, cash flow dynamics, and aggressive land acquisitions to a strategic pipeline spanning residential, commercial, and hospitality assets. Investors are advised to watch multiple levels as Brigade recalibrates for double-digit growth and sustained market outperformance.

Strong Endorsement from Kotak Institutional Equities; BUY Recommendation

Kotak Institutional Equities firmly recommends a BUY for Brigade Enterprises, pegging its Fair Value at Rs1,300—down slightly from the prior Rs1,365 but reflecting realistic project margins and adjusted stakes. The stock currently trades around Rs938, making present valuations compelling for medium-term accumulation. With a projected return exceeding 15% in the coming 12 months, this call is based on solid fundamentals and forward-looking business development.

Operational Performance: Weak Pre-Sales Offset by Robust Rental and Hospitality Growth

Brigade's 1QFY26 pre-sales registered Rs11.2 billion, a modest 3% year-on-year rise, but suffered a 54% sequential drop owing to sparse new launches. The company debuted only one residential project in Chennai, demonstrating cautious deployment of its inventory.
Leasing and hospitality remain stalwart contributors, with lease rentals hitting Rs3 billion (+15% YoY) and hospitality registering a 19% YoY revenue surge. Occupancy rates for leased assets steadily improved to 91%, while hospitality segment notched an 8% uplift in Average Room Rates (ARR). These metrics signal substantial recurring income streams, vital as Brigade ramps up capex for fresh assets.

Cash Flow Resilience Amid Elevated Land Payments

Collections for the quarter soared to Rs17.3 billion (+8% YoY), but were offset by elevated land payments of Rs13.3 billion for new acquisitions. Free cash flow turned negative at (-) Rs12.4 billion, marking a sharp uptick in net debt to Rs22.7 billion from Rs9.6 billion in March 2025. Attributable net debt stood at Rs15.3 billion, a figure closely monitored by stakeholders.

Expanding Land Bank and Strategic Project Launches

Brigade's aggressive approach to land acquisition is evident—10 million sq ft added in 1QFY26 alone, with the land bank now at 587 acres, carrying pending payments of Rs13.4 billion. Prime parcels include an 11-acre site in Bengaluru earmarked for Rs20 billion GDV (Gross Development Value) and 5.4 acres in Chennai valued at Rs16 billion GDV.

Vertical Analysis: Residential, Leasing, and Hospitality

Residential: While pre-sales were subdued at Rs11.2 billion for 0.95 million sq ft, average realizations rose 24% YoY to Rs11,800/sq ft, driven by premium launches. Brigade targets 15% YoY growth in FY2026 pre-sales, with a strong launch pipeline totaling 12.9 million sq ft and a GDV of Rs130 billion.
Leasing: The annuity business expanded to a 9.4 million sq ft asset base, sustaining occupancy rates of 91–92%. EBITDA margins for leasing soared to 75% for the quarter, highlighting operational efficiency.

Hospitality: Brigade reported a 24% YoY spike in EBITDA for its hotel business, aided by higher RevPAR and ARR. With 1,604 keys across nine hotels and a new pipeline of 1,700+ keys, Brigade is doubling its footprint, targeting strategic locations in Bengaluru, Chennai, Hyderabad, Kochi, and Thiruvananthapuram.

Key Financial Metrics and Forecasts

Investor Levels and Target Price

Levels to Watch: Immediate support at Rs938, resistance at Rs1,450 (52-week high), and all eyes on the Rs1,300 target set for accumulation by institutional buyers. The stock's attractive entry point is matched by sector tailwinds in real estate, annuity rentals, and hospitality expansion.

Business Development and Future Pipeline

Brigade is intent on launching 12.9 million sq ft of residential projects and 2.6 million sq ft of commercial assets in FY2026, all underpinned by robust RERA approvals. Ongoing projects such as Tech Boulevard and Padmini Tech Valley deepen Brigade’s recurring rental base.
The land bank, boasting incremental potential of 60 million sq ft, ensures steady growth in pre-sales and revenue recognition over the next several quarters.

Valuation and Comparative Analysis

On an FY2027E basis, Brigade trades at an attractive 7X EV/EBITDA multiple—well below sector averages, offering ample re-rating headroom. The management’s execution track record, diversified asset base, and prudent debt management position Brigade as a mid-cap favorite for institutional and savvy retail investors alike.

Risks and Forward Guidance

Downside risks include volume volatility, project delays, and sluggish revenue conversion from residential launches. However, Brigade’s diversified model, healthy collections, and gradual improvement in net operating cash flows temper these concerns. The company’s vigilant replenishment of land parcels and calculated capex on annuity and hospitality assets add an armor of resilience.

Bottomline: Kotak’s Conviction—A Preferred Pick for Growth and Value

In a market dominated by selective momentum, Brigade Enterprises emerges as Kotak’s preferred pick in the mid-cap segment. With sector view rated ‘Attractive,’ persistent business development and compelling EV/EBITDA metrics, Brigade offers investors a compelling blend of growth, stability, and upside potential. Kotak Institutional Equities reiterates its BUY, targeting Rs1,300 for informed accumulation as Brigade redefines execution and expansion in the Indian real estate landscape.