1QFY17 profit up led by one-off exceptional item: DLF’s PAT increased sharply to INR2.6b in 1QFY17, led by one-off exceptional income of INR3b from the sale of DT Cinemas to PVR Cinemas. Revenues decreased 16% YoY to INR18.7b during the quarter. EBITDA of INR7.5b (-10% YoY) missed estimate by 11%, but margins at 40% showed an improvement on YoY basis.Muted presales: Presales came in at 0.03msf (INR2.1b), of which ~55% was contributed by Phase V projects (Crest and Camellias), followed by new Gurgaon assets (INR0.9b). The company achieved gross leasing of 0.86msf in 1QFY17, but lease expiry stood at 0.91msf. Leasing offtake was also affected by virtually no inventory at most projects. Effective net debt stood at INR221b (debt/equity of 0.8x).

Valuation and view: Barring interim excitement in Phase V projects, the outlook remains subdued for the DevCo business. RentCo performance has been steady and offers value unlocking potential. Maintain Buy with TP of INR201 (SOTP-based), with macro policy as key immediate trigger.