Moneycontrol Bureau
Shares of DLF climbed another 2 percent in early trade Thursday ahead of board meeting for mulling long term growth and rental business plans. It was in addition to 2 percent upside in previous session.
A meeting of board of directors is scheduled to be held today to consider and deliberate on recommendations, if any, of audit committee.
The realty major said audit committee was authorised (on August 29, 2014) to evaluate, review and recommend various strategic and financial options to drive sustainable and long-term growth and development of rental business and resolve conflict of interest in the ownership of DLF Cyber City Developers (DCCDL) with inter-se affiliated persons/entities.
With maintaining underperform rating, CLSA (on October 6) in its note said DLF’s upcoming board meeting to decide on its rentco (rent company) business’s future has raised hopes of deleveraging in the near term.
According to the brokerage, two key issues are to be settled - 40 percent stake that promoters are entitled to in the main rentco subsidiary (DCCDL, 85-90 percent of assets) is likely to be resolved. DLF also plans to convert its rentco into a self-sustaining platform, with a part stake sale upfront, triggering deleveraging near term.
"We build in Rs 30,000 crore enterprise value for DLF’s rent company (rentco) and find the stock to be fairly priced currently. While higher rentco valuations are an upside risk to our estimates, the weak development company business and poor track record of converting asset sales to sustainable debt reduction make us cautious on an imminent re-rating," it said.
Additionally, on October 5, sources told CNBC-TV18 that DLF will raise USD 1.5-2 billion by selling up to 50 percent stake in rental business, which will be used for reducing debt burden by 50 percent.
The company currently has debt of Rs 20,000 crore and its rental business company earns Rs 2,000-2,500 crore per year.
At 09:34 hours IST, the scrip of DLF was quoting at Rs 140.30, up Rs 1.80, or 1.30 percent on the BSE.Posted by Sunil Shankar Matkar
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