Realty major DLF will reduce its net debt to about Rs 17,500 crore by March 2016, from Rs 20,300 crore at the end of 2014, as company plans to raise funds through various routes to cut borrowings, rating agency Crisil has said.
The rating agency removed its ‘negative watch’ from DLF’s bank facilities and debt instruments, following the Securities Appellate Tribunal (SAT) order last month quashing the 3 year market ban imposed on DLF by markets regulator Sebi.
Crisil had placed its DLF ratings on “watch with negative implications” in October 2014 following the Sebi order.
However, the rating outlook on the long term facilities remains ‘Negative’,” Crisil said in a note filed by DLF to the stock exchanges.
The ‘negative’ outlook is because of high debt level, weak operating cash flow and residual uncertainty over regulatory issues, the rating agency added.
Crisil, however, said that SAT’s favourable order would enable DLF access capital markets and would support its financial flexibility.
“DLF plans to raise over Rs 2,500 crore through fresh issue of equity shares and real estate investment trusts (REITs) over the medium term,” Crisil said.
The agency believes that “DLF will reduce its debt (net of liquidity) to around Rs 175 billion as on March 31, 2016 from Rs 203 billion as on December 31, 2014”.
DLF had a net debt of Rs 20,336 crore at the end of third quarter of 2014-15 fiscal.
Crisil said it would continue to monitor progress of DLF’s debt reduction plan, improvement in operating cash flows and outcome of regulatory issues.
DLF is the country’s largest real estate firm with a land bank of about 300 million sq ft, of which about 50 million sq ft is under construction. The company has a rental income of over Rs 2,000 crore annually.