DLF Q2 net seen down 1.7% at Rs 136.2 cr: Motilal Oswal

Motilal Oswal has come out with its second quarter (July-September) earnings estimates for the real estate sector. The brokerage house expects DLF to report a 24.8 percent degrowth quarter-on-quarter (down 1.7 percent Y-o-Y) in net profit at Rs 136.2 crore.

Revenues of DLF are expected to decrease by 11.3 percent Q-o-Q (up 0.7 percent Y-o-Y) to Rs 2053.7 crore, according to Motilal Oswal.

Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to fall by 15.7 percent Q-o-Q (up 3.5 percent Y-o-Y) to Rs 772.2 crore.

Motilal Oswal's Report on DLF:

DLF's 2QFY14E revenue is estimated at Rs 20.5 billion (flat Y-o-Y), EBITDA at Rs 7.7 billion (+3.5 percent Y-o-Y) and PAT at Rs 1.36 billion (-2 percent Y-o-Y). EBITDA margin is estimated at 37.5 percent (-2pp Q-o-Q).

Launch of Camellia had resulted in strong revenue booking and margin expansion in 1QFY14. Hence, broking firm expect relatively lower incremental
pre-sales and execution in Camellia would lead to weaker revenue booking and margin contraction in 2QFY14E.

DLF had assumed Rs 0.77 billion of profit in 1QFY14 which pertains to one of the wind mills transactions. Thus, 2Q EBITDA margin could get impacted due to provisioning of remaining divestments.

Post strong pre-sales in super luxury projects in 1QFY14, DLF is expected to witness a decline in run-rate in 2Q (Rs 7.5 billion), due to the absence of new launches and lower pre-sales velocity in recent launches.

Expect cash flow situation to improve Q-o-Q, with receipt of balance Rs 5.25 billion from wind mills' divestments, along with improvement in collections from super luxury projects. However, core FCFE would continue to remain negative.

DLF trades at 20.2x FY15E EPS, 0.9x FY15E BV and 50 percent discount to our NAV estimate of INR 270.

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