Feb 19, 2013, 07.23 PM | Source: Moneycontrol.com
Motilal Oswal is bullish on DLF and has recommended buy rating on the stock with a target price of Rs 300 in its February 18, 2013 research report.
Motilal Oswal (more)
"DLF, revenue declined 36% YoY to INR13.1b (v/s our estimate of INR20.6b). EBITDA de-grew 89% YoY to INR0.87b (v/s our estimate of INR8.4b) and EBITDA margin declined from 37% in 2QFY13 to 6.6%. The subdued revenue booking and margin contraction can be attributed to the various provisions that DLF has made in 3QFY13 to the tune of INR5.62b . Cost adjustment has led to slowdown/ reversal of POCM (percentage of completion method) revenue across projects, in turn resulting in overall revenue/margin contraction.
Pre-tax loss of ~INR5.5b from normalized operations: PAT grew 10% YoY to INR2.8b (v/s our estimate of INR8.7b), driven by other income, which includes ~INR8.4b of PBT from the NTC mill transaction. PAT was also hit by higher depreciation, which includes INR650m of loss booking in Aman transaction. Adjusting for PBT contribution from NTC, DLF’s normalized operations posted a loss of ~INR5.5b at the PBT level.
Presales up QoQ: Presales improved QoQ on the back of recent launches of 1.8msf (Gurgaon Sky Court and Chandigarh). It sold 2.3msf (INR12.5b) v/s 1.6msf (INR6.3b) in 2QFY13. The management has guided new launches of 12msf (~INR150b+) in the premium/luxury segment over the next 4-5 quarters. Due to delay in Phase-V launch to FY14, we have downgraded our presales estimates for FY13/14/15 from INR55b/65b/75b to INR40b/62b/73b.
Net debt declines by INR18.7b: In 3QFY13, DLF is likely to have generated negative FCFE of ~INR3.5b. On the back of NTC transaction cash flow of INR22.3b in 3QFY13 (initial INR5b received in 2QFY13), net debt declined by INR18.7b to INR221b (0.84x).
P&L to remain subdued despite improvement in underlying business; Maintain Buy: We expect DLF’s P&L to remain subdued in near-term due to changes in accounting practice. This is despite an expectation of healthy uptick in core operations and de-leveraging hereon. The stock trades at 1.5x FY15E BV, 23.2x FY15E EPS, and at 17% discount to NAV . Maintain Buy, with a target price of INR300," says Motilal Oswal research eport.
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