Feb 20, 2013, 06.19 PM | Source: Moneycontrol.com
Prabhudas Lilladher is bullish on DLF and has recommended buy rating on the stock with a target price of Rs 298 in its February 18, 2013 research report.
, Prabhudas Lilladher |
"DLF's target is to spur EBIDTA through additional leasing, high value Phase V launches, New Gurgaon launches as well key launches in its ‘Rest of India' portfolio. It targets an EBITDA of Rs82.5bn which shall result in FCF of Rs30bn. This, coupled with two capital issuances totalling to Rs55bn shall lead to targeted debt levels of Rs100bn which can be easily serviced by its rental portfolio.
Having visited DLF's key land parcels in Gugaon and Delhi, our confidence in the quality of its land bank has been heightened on account of the infrastructure development that has been undertaken to enhance the value of the offering especially in Cybercity & Phase V, Gurgaon. However, in terms of the high-value launches in Phase V, Gurgaon that we had expected in Q4FY13, are more likely to take place in H1FY14.
DLF reported revenues of Rs13.1bn, 36% decline both on a YoY & QoQ basis. With the new accounting guidelines, new launch ‘Sky Court' was not accounted in sales during the current quarter. Margins were extremely subdued at 6.6% as it provided for the potential loss on the Aman hotel sale as well as ‘Timely Payment Rebates' on all projects under handover. Besides, costs for certain projects were also revised upwards.The PBT impact of higher costs was Rs5.62bn. PAT increased by 10% YoY and 106% QoQ to Rs2.8bn on account of profit accounted for the NTC mill sale transaction to the tune of 8.38bn.
Valuations: On account of a reduction in launch estimates for FY13 as well as a change in accounting policies, we are revising our earnings downwards for FY13 & FY14. We are reducing topline by 31% & 32% for FY13 & FY14 respectively and our PAT downwards by 34% & 51% respectively for the same time period. We maintain BUY on the stock with a price target of Rs 298," says Prabhudas Lilladher research report.
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