CLSA reaffirms 'hold' on DLF, optimistic on growth in NCR region

DLF is targeting a 15 percent growth in presales and rental income over the medium term.

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International brokerage CLSA decided to maintain its 'hold' rating real estate giant DLF with a target price of Rs 775, citing the company's focus on profitable growth and execution.

CLSA's target price on DLF implies a 7 percent downside from the previous session's closing price.

According to CLSA, DLF is targeting a 15 percent growth in presales and rental income over the medium term. The firm also forecasts EBITDA and cash flow to grow at an even higher rate.

CLSA remains optimistic about the National Capital Region (NCR) market, where DLF is a major player, and does not believe the market is overheated. In terms of capital allocation, DLF plans to utilize its free cash flow towards dividends, capital expenditure (capex), and land investments.

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DLF’s approach is different from many of its peers, as the real estate major has no plans for a pan-India expansion.

Instead, it will look to enter select markets such as Noida and Mumbai. CLSA expressed some concerns regarding the rise in the scale of operations among top developers, which could introduce execution risks as DLF grows its business.

In the quarter ended June 2024, DLF reported a more than three-fold jump in pre-sales as it clocked bookings of Rs 6,400 crore, largely driven by the successful launch of the second phase of Privana West, Gurugram. The company continues to sustain momentum at its ultra-luxury project, The Camellias, in DLF 5, with bookings of Rs 250 crore.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.