Hold DLF; target of Rs 190: Axis Direct
Axis Direct recommended hold rating on DLF with a target price of Rs 190 in its research report dated June 06, 2017.
June 07, 2017 / 04:59 PM IST
Axis Direct's research report on DLF
DLF booked muted pre-sales of Rs 4 bn in Q4FY17. Management reiterated that demand remains weak after demonetization and, will take 4-6 quarters to revive. With weak collections and plan to spend Rs 30bn for completing ongoing projects, DLF may face cash flow deficit over next few quarters, pushing its debt further up (debt already up by Rs 7 bn in Q4).
While operations remain subdued, DLF is in the last leg of closure of DCCDL transaction (promoters’ stake sale); expected to conclude by H1FY18, the deal is a near term trigger. Promoter infusing the sale proceeds from DCCDL in DLF and the subsequent equity raising will address concerns over DLF’s leverage. We roll forward our valuation to arrive at our revised TP of Rs 190 (vs. Rs 165 earlier).
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