Brigade Enterprises VS Oberoi Realty: One of the most well-known industries in the world is real estate. The sector not only provides employment to millions of people but also plays a major role in the development of the country.
Be it housing or corporate building, real estate is present everywhere. In this article on Brigade Enterprises VS Oberoi Realty, we will compare two of the biggest players in the sector. Keep reading to find out!
Table of Contents
Industry Overview
The Indian real estate sector comprises four key segments which are Residential, Commercial, Retail, and Hospitality. All the segments were heavily impacted by the outbreak of the covid pandemic. In the first quarter of the last fiscal year, the demand for real estate fell by as low as 79%.
The government took a lot of measures to revive the sector. Some of the measures include cheaper loan rates to increase liquidity and extending discounts to developers to offload their excess unsold inventories. The state governments also aided the companies by reducing various duties and taxes.
By the year 2040, the real estate market is expected to grow to 65,000 crores from 12,000 crores in 2019. Further, the real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13% to the country’s GDP by 2025.
About the company
Brigade Enterprises
Brigade Enterprises Limited is a real estate and property development company headquartered in Bangalore, Karnataka. Brigade Group provides property management services, hospitality and education across several major cities in South India. It has operations in Mangalore, Mysore, Chennai, Kochi, Hyderabad, Chikmagalur and Ahmedabad.
Oberoi Realty
Oberoi Realty Ltd is a real estate development company, headquartered in Mumbai. , It is part of Oberoi Realty Group, which is majorly focused on developments in the residential, office space, retail, hospitality, and social infrastructure verticals.
Financial metric of the company
Let us now compare the financials of both companies.
Brigade Enterprises VS Oberoi Realty – Revenue and Net Profit
In the last three years, both the companies have shown a declining trend in their total revenue earned. In FY21, Oberoi Realty earned Rs 2,053 Cr while Brigade Enterprises was able to generate Rs 1,950 Cr in revenue.
Similar to revenue, the net profit of Brigade enterprises has also been declining in the last three years. On the other hand, Oberoi Realty has seen a fluctuating net profit. In FY21, Brigade Enterprises posted a net loss of Rs 46.32 Crores while Oberoi Realty posted a net profit of Rs 739.29 Crores.
| Revenue & Net Profit (Rs in Cr) | |||||
|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Revenue | |||||
| Brigade Enterprises | 2,024 | 1,897 | 2,973 | 2,632 | 1,950 |
| Oberoi Realty | 1,114 | 1,265 | 2,583 | 2,238 | 2,053 |
| Net Profit | |||||
| Brigade Enterprises | 153.08 | 140.33 | 240.31 | 130.58 | -46.32 |
| Oberoi Realty | 378.59 | 458.80 | 816.93 | 689.33 | 739.29 |
Brigade Enterprises VS Oberoi Realty – Investors Earnings
ROE is a gauge of a corporation’s profitability and how efficiently it generates those profits. A positive and higher ROE is ideal. If FY21, Brigade Enterprises had a negative ratio as they reported losses while Oberoi Realty has a ratio of 8.18.
ROCE is a metric that takes into account the debt of the company and estimates how efficiently the company is able to generate profits from its capital employed. In the last three years, both companies have seen a declining ratio.
A higher EPS indicates that the company has higher profits as the ratio is calculated by dividing the net income by the total outstanding shares of the company. Brigade Enterprises has a negative EPS while Oberoi Realty has a positive ratio.
| Return ratios | |||||
|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Return On Equity (ROE) | |||||
| Brigade Enterprises | 10.36 | 6.68 | 12.66 | 5.11 | -4.33 |
| Oberoi Realty | 6.78 | 7.7 | 11.47 | 8.21 | 8.18 |
| Return On Capital Employed (ROCE) | |||||
| Brigade Enterprises | 11.78 | 9.17 | 12.14 | 7.85 | 3.12 |
| Oberoi Realty | 9.15 | 9.08 | 13.68 | 10.64 | 9.47 |
| Earnings Per Share (EPS) | |||||
| Brigade Enterprises | 0.13 | 0.1 | 0.18 | 0.06 | -0.02 |
| Oberoi Realty | 0.11 | 0.14 | 0.22 | 0.19 | 0.2 |
Brigade Enterprises VS Oberoi Realty – Valuations
The sectoral PE for both the companies is 32.11. The TTM PE ratio of Brigade Enterprises is 128.63 while that of Oberoi Realty Ltd. is 27.50.
The P/B ratio is used by investors to identify potential investment opportunities. A lower ratio is considered ideal. In the last two years, both companies have maintained similar ratios.
The EV/EBITDA ratio is used to compare the value of a company, debt included, to the company’s cash earnings less non-cash expenses. A lower ratio is considered better. Brigade enterprises have a lower ratio as compared to Oberoi Realty as of FY21.
| Valuation Parameter | |||||
|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Price to Earnings Ratio (PE) | |||||
| Brigade Enterprises | 17.37 | 23.78 | 14.13 | 20.66 | 0 |
| Oberoi Realty | 32.99 | 37.64 | 23.47 | 17.63 | 28.3 |
| Price to Book Value (P/B) | |||||
| Brigade Enterprises | 1.58 | 1.46 | 1.57 | 1.2 | 2.49 |
| Oberoi Realty | 2.18 | 2.83 | 2.39 | 1.41 | 2.23 |
| EV/EBITDA | |||||
| Brigade Enterprises | 8.38 | 10.88 | 8.24 | 9.7 | 19.14 |
| Oberoi Realty | 21.08 | 26.85 | 16.48 | 12.37 | 21.5 |
Brigade Enterprises VS Oberoi Realty – Shareholding Pattern
Brigade Enterprises VS Oberoi Realty- Future Prospects
Brigade Enterprises Limited- Moving forward the company plans to expand geographically. Apart from that, it will also focus on cost optimization. Recently, they announced a budget of Rs 10,000 crore to double project launches across verticals, including residential, commercial and hospitality, in the next three years.
It has forged a partnership with Singapore -based private equity firm GIC Singapore Brigade under which each party will invest Rs750 crore for land purchases.
Oberoi Realty Limited- The company is positive about the sector and its business going forward. It expects that there will be a pickup in the demand for real estate across all the segments.
The company has an established presence in Mumbai and will further take on projects to expand its reach in the nearby regions. The management of Oberoi realty is also looking to upgrade its IT infrastructure.
In closing
In this article, we looked at two of the biggest players in the real estate sector in India. The industry has seen a lot of hurdles in the last few years starting from 2016 when demonetization was announced.
Adding to that are the rising interest rates and inflationary trends in basic building materials such as cement, steel, and labour costs which will add to the financial strain on the residential sector. However, moving forward the leadership will be decided by the strategies adopted by the company.
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