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Accumulate DLF; target of Rs 180: Prabhudas Lilladher

Brokerage house Prabhudas Lilladher is bullish on DLF and has recommended 'Accumulate' rating on the stock with a price target of Rs 180 in its research report dated October 31, 2013.

November 05, 2013 / 03:13 PM IST
 
 
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Prabhudas Lilladher's report on DLF


"With recognition from the current projects delayed on account of the new accounting guidelines, earnings for the quarter were muted. Revenues stood at Rs19.5bn, 4 percent YoY decline and 15.5 percent QoQ decline. Margins were also subdued at 30.4 percent on account of recognition of old low-margins projects. The company's PAT was weak at Rs1bn, 28 percent YoY and 44.8 percent QoQ decline."


"DLF launched the second Phase V project 'Camellias' and sold 0.09m sq.ft at the same, amounting to Rs2.47bn. Overall, DLF has sold 1.16m sq.ft at its Phase V project this year. Overall, the company has sold 0.91m sq.ft during the quarter valued at Rs7.3bn and a total of 2.72m sq.ft valued at Rs31.6bn. The company's targeted sales in terms of value for the year stands at Rs60bn, which as per management commentary, shall be achieved from Phase V and New Gurgaon sales."


"Net debt declines; company introducing new debt structures: Sequentially, net debt has declined by Rs 8.61bn from Rs.20.3 bn to Rs 19.5bn with the completion of the IPP. The company has also completed the windmill sale transaction and has received Rs5.25bn on account of the same with a small portion pending. DLF has also entered into a share purchase agreement to divest 74 percent stake in the Life Insurance JV with Prudential. DLF is confident of bringing its debt down to Rs 17.5bn by the year end as it expects to complete the Aman transaction during the fiscal. In case of a delay, it expects to substitute a part of the same through other non-core asset sales which it is currently working on. Further, the company is in the process of introducing a new debt product 'Commercial Mortgage Backed Securities' which shall help in improving the quality of its debt. However, being a new product, stabilization of the same shall take some time."


Valuations: "DLF's NAV stands at Rs 436.8 bn which translates to Rs 257/share. We are attributing a 30 percent discount to the same to arrive at our target price, given the weak macro-economic scenario. This translates to Rs 180. We maintain 'Accumulate'," says Prabhudas Lilladher research report.

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first published: Nov 5, 2013 03:13 pm

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