Accumulate DLF; target Rs 288: Angel Broking

Angel Broking is bullish on DLF and has recommended accumulate rating on the stock with a target price of Rs 288 in its February 19, 2013 research report.

"DLF reported a disappointing set of numbers, both on the revenue and profitability front (For 3QFY2013). On the top-line front, its revenue declined by 35.6% yoy to Rs 1,310cr which was below consensus estimate of Rs 2,040cr. EBIDTAM came in at 6.6% for the quarter which was significantly lower than the street estimate of 36.6%. This was mainly on back of (a) nil revenue booking from its recently launched project Skycourt, (b) provision for loss on non-core assets and (c) cost adjustment on account of inflationary pressure not provided for in earlier quarters. However, owing to surge in other income, mainly due to asset sale, the company reported a PAT of Rs 285cr for the quarter, indicating a growth of 20.2% yoy.

Sales booking was recorded at 2.27mn sqft, up from 1.59mn sqft in the sequential previous quarter, mainly due to new launches, ie 1.24mn sqft in Gurgaon, 0.57mn sqft in Chandigarh and 1.1mn sqft in Bangalore during the quarter. On the leasing front, the company leased out an area of 0.69mn sqft in 3QFY2013, registering a growth of 35.3% qoq.

The company has been able to reduce its net debt level owing to monetization of its non-core assets. Going forward, on the back of new launches, we expect sales volume of 10.2mn sqft and 11.7mn sqft for FY2013 and FY2014 respectively. In the short term, we continue to remain positive on the company’s near-term plans of debt reduction. Further with the high value of new project launches and monetization of non-core assets, we expect improvement in cash flow going forward. We recommend an Accumulate rating on the stock with a target price of Rs 288," says Angel Broking research report.

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