DLF well-placed to ride COVID-19 headwinds; CLSA, Jefferies raise target price

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26 Aug, 2025 12:21

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DLF, the country’s largest real estate developer, on June 4 reported a net loss of Rs 1,860 crore for the quarter ended March 31 due to the reversal of deferred tax assets (DTA) as it adopted a lower tax rate.

For FY20, DLF reported a net loss of Rs 583.19 crore as against a net profit of Rs 1,319.22 crore in FY19. Total income fell to Rs 6,884.14 crore in FY20 from Rs 9,029.41 crore in the preceding year.

Most realty players were already under pressure when COVID-19 hit businesses and the economy. The industry had been trying to find answers to the falling sales and deteriorating finances when COVID-19 came to add to their miseries.

The company said the COVID-19 crisis has presented an opportunity for it to undertake exercises in being leaner and far more efficient in terms of its cost structure.

"Demand may remain muted initially, but DLF’s strong brand image and unwavering commitment to quality are expected to ensure healthy sales revival.  The company retains its positive mental outlook, with sustained success in collections, business continuity support, and positive feedback from tenants," DLF said.

The company claimed it continues to maintain comfortable levels of liquidity to meet its business requirements and despite the uncertainty in the environment, all stakeholder liabilities, inclusive of financial commitments have been met without availing any deferments or moratoriums.

On the road ahead, the company said it expects Q1 FY21 to be a washout, owing to the extended lockdown and lack of short-term visibility for the buyers, adding that it anticipates that some semblance of normalcy will return towards Q3 FY21.

Brokerages have not lost faith in DLF. Most of them have maintained 'buy' calls, with CLSA and Jefferies even raising their target prices marginally.

CLSA has maintained a 'buy' recommendation on DLF, raising the target price to Rs 190 from Rs 180.

As per CNBC-TV18, CLSA is of the view that the change in sales strategy, with the focus on mid-segment, may revive volume, while the company's plan to commence sales during construction may also revive volume.

Jefferies too has maintained a 'buy' rating, raising the target price to Rs 202 from Rs 186.

"The company's plan to shift back to residential launches during construction is a welcome step. We expect residential sales to rise to a 20 percent CAGR over FY20-22, 2 times prior pace," CNBC-TV18 reported, Jefferies saying so.

HDFC Sec has also maintained a 'buy' recommendation on the stock with a target price of Rs 219.

"We maintain a 'buy' on DLF as it is well-placed to ride the COVID-19 headwinds. Balance sheet remains strong, new affordable launches may drive pre-sales and Cash flow may improve depending on Phase-V sales," said HDFC Securities.

The brokerage firm, however, added that the further delays in monetisation of luxury segment inventory and the inability to fully utilise mark-to-market potential from rental assets are the key risks for the company.

Kotak has also maintained a 'buy' recommendation on the stock with a target price of Rs 200.

"We maintain a 'buy' rating and revise fair value to Rs 200 from Rs 230 for DLF as we revise downwards our earnings by 27 percent for FY2021E and 17 percent for FY2022E to factor lower sales, delay in construction and delivery of projects, and loss of retail revenue as well as lower occupancy in the rental business," Kotak said.

The brokerage added that the current market price factors full value for the annuity and residential business while assigning little value to the land bank in DLF.

Shares of DLF closed 2.80 percent lower at Rs 152.80 on BSE on June 8.

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