Hold DLF; target of Rs 185: Edelweiss

Edelweiss' research report on DLF

DLF’s residential new sales continued to remain lackluster in Q4FY17. We expect this to continue in ensuing quarters as well given sustained slowdown in its mainstay Gurgaon market coupled with limited visibility on new launches. Though rental business is robust, meaningful uptick in annuity income is likely only post FY19 when upcoming assets become operational.

Outlook

We expect muted operations for DLF in coming quarters. Valuation of promoter stake sale in rental assets, improvement in Gurgaon market and new launches are key stock catalysts. Earnings‐based valuations appear rich versus peers – 37x / 33x FY18E / FY19E EPS (ex‐CCPS deal impact). We maintain ‘HOLD/SU’.