Buy DLF; target of Rs 504: HDFC Securities

HDFC Securities' research report on DLF

DLF recorded its highest-ever annual and quarterly presales of INR 150.6bn (+107% YoY) and INR 84.5bn (+210%/+237% YoY/QoQ) resp., beating its annual guidance of INR 80bn. This was on the back of strong demand for its luxury project—The Arbour (launched and sold out in Q4FY23)—which recorded presales of more than INR 80bn. For FY24, it expects to achieve at least INR 110bn in presales backed by 11.2msf of launches with a sales potential of INR 197bn. Of this, 5msf will be in the Luxury segment with 3.5msf in DLF Phase V and 1.5msf in Chennai. Net debt reduced significantly to INR 7.2bn (vs INR 20.9bn in Q3FY23), on the back of strong residential collection of INR 18bn (+52%/+41% YoY/QoQ) during Q4FY23. It expects to grow residential collection by 20-25% in FY24 (INR 53bn in FY23) with free cash earmarked for growth, dividend payout and debt reduction.

Outlook

Given (1) the strong presales momentum supported by price hikes; (2) robust launch plans; and (3) an expected increase in office occupancy levels, we maintain BUY on DLF, with an increased TP of INR 504/share.

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