JP Morgan stays overweight on DLF; stk dn 2.7% on weak Q3

Brokerage house JP Morgan has retained its ‘overweight’ rating on realty firm DLF even as the company’s third quarter earnings disappointed the market. The stock was down about 2.7 percent to Rs 247 in noon trade.

Morgan analysts Saurabh Kumar and Gunjan Prithyani see the reduction in the company’s debt as a key positive though operational cash flows are still marginally negative.

DLF’s 3Q reported earnings at Rs 258 crore included large one-time gains/losses, i.e. gains on NTC land sale, provisions on account of truing up of project costs and loss provision for Aman sale. However, importantly net debt at Rs 21,300 crore came down by Rs 187 crore during the quarter,” the JP Morgan nore to clients said.

“On a core basis, operational cash flows are still marginally negative for the company, on our calculations. However, this should be rectified once highvalue luxury launches in Gurgaon happen over the next few months,” the note said.

JP Morgan sees delay in launch of luxury Gurgaon projects, lower-than-expected debt reduction, lower-than-expected policy rate cuts, and material de rating of the overall macro fundamentals in India as key downside risks for the company.