DLF Ltd. share price target

DLF is a north India based real estate developer.

Renewed focus on residential business a key positive

DLF, incorporated in 1963, is a north India based real estate developer

With slow movement on inventory of Rs 48bn in the luxury projects of DLF Phase V, the company is recalibrating its go-to market with conversion of plotted land-bank to low-rise independent floor development with Rs 1.5-3mn ticket size. This shall enable the company to bridge the gap in sales. Though the net debt is expected to remain in the same range as of 4QFY20, through accelerated monetization of inventory coupled with monetization of its land bank and land entitlements, the company plans to reduce net debt to ~Rs 20bn. We maintain BUY. Key risks (1) Further delays in monetization of luxury segment inventory (2) Inability to fully utilize mark-to-market potential from rental assets. DLF luxury real estate continues to suffer from weak demand, elevated property prices and hence slower churn in ready inventory. Leasing portfolio continues to perform and with addition of new assets we have increased our SOTP-based TP to Rs 284/sh (vs. Rs 265/sh earlier). Strong balance sheet augurs well for lease asset portfolio growth.

Despite increase in net debt during the quarter with net D/E at 0.12x (vs 0.09x in 1QFY20), it is within acceptable limits with the company also committed towards further reduction in leverage over FY20-21E. Residual unsold inventory stands at Rs 101bn. Total residual collection on sold inventory is pegged at Rs 27.4bn vs. Rs 17.5bn of balance construction costs. DLF's luxury portfolio is expected to see increased momentum in 2HFY20E. With strong balance sheet, robust lease momentum and residential pre-sales expected to pick-up in 2HFY20, DLF is well placed. We maintain BUY. Key risks (1) Delay in ready inventory monetization (2) Inability to fully utilize mark-to-market potential from rental assets. We maintain BUY on DLF post positive pre-sales trajectory for a second consecutive quarter across the development portfolio, settlement of DCCDL dues and strong lease rental momentum. Our SOTP-based TP is maintained at Rs 258/sh. DLF balance sheet is strong post QIP and promoter fund infusion.

DLF has achieved significant BS deleveraging with net D/E hitting 0.09x in 1QFY20. Residual unsold inventory stands at Rs 110bn (~4.5 years of inventory). Total residual collection on sold inventory is pegged at Rs 28bn vs. Rs 20bn of balance construction costs. DLF Phase V luxury projects are seeing good traction. With strong balance sheet, robust lease momentum and residential pre-sales recovery, DLF is well placed. We maintain BUY. Key risks (1) Delay in ready inventory monetization (2) DCCDL settlement (3) Inability to fully utilize mark-to-market potential from rental assets (4) Overall slowdown in leasing momentum. We maintain BUY on DLF post positive pre-sales trajectory in Phase V projects, debt reduction and strong lease rental momentum. Our SOTP-based TP is maintained at Rs 258/sh. DLF balance sheet is strong post QIP and promoter fund infusion.

DLF Ltd primarily engaged in developing of residential and commercial properties. The company has a unique business model with earnings arising from development and rentals. Its exposure across businesses, segments and geographies mitigates any down-cycle in the market. From developing 22...

Over last 2yrs DLF has achieved significant BS deleveraging with net D/E likely hitting 0.1x by FY20E end. Pre-sales recovery is on track with 4.7yrs of unsold completed inventory. DLF maintained that it will launch projects during advance stage of completion. Hines JV is on track with construction commencement by Dec-19. Sales strategy here will be mix of strata sales and leasing. DLF phase V ~2-2.5mn sqft new construction will start in Dec-19 and will cater to Crest type product. With strong balance sheet, robust lease momentum and residential pre-sales recovery, DLF is well placed. We maintain BUY. Key risks (1) Delay in ready inventory monetization (2) High interest rates (3) Rental correction. We maintain BUY post an encouraging quarter. Our SOTP-based TP has reduced to Rs 258 (vs Rs 264 earlier). We have increased our FY20/21E EPS by 19.8/50.2%, led by debt rationalization post QIP, promoter fund infusion and reduction in DCCDL dues post 2HFY20E.

We Maintain BUY with NAV- based TP of Rs 264/sh. DLF posted Revenue/PAT of Rs 22.2/3.4bn (Rs 13.5/2.9bn higher on IND AS 115). Profits from Associates (incl. DCCDL) dipped 7% QoQ to Rs 2.2bn. DLF has achieved net presales of Rs 5.6bn (vs gross presales of Rs 8.0bn) with 9MFY19 net presales now at Rs 17.9bn (vs. management guidance of ~Rs 22.5bn for full year FY19E).

Maintain BUY with NAV- based TP of Rs 253/sh. DLFs 2QFY19 revenue came in at Rs 21.4bn (+42% QoQ, 37% beat, Rs 10bn higher on IND AS 115). APAT was at Rs 3.7bn (Rs 4bn higher on IND AS 115). DLF has achieved net sales of Rs 6.3bn (>Rs 12bn of sales in 1HFY18 vs Rs ~10bn in FY18 considering the sales were paused till Nov 18).