Sebi ruling negative for DLF

Updated: Oct 15 2014, 07:46am hrs
We have a buy rating on DLF. Given the low valuations, we believe the stock will come under pressure given successive legal and regulatory setbacks.

The Securities and Exchange Board of India (Sebi) has barred DLF and six of its senior executives from accessing capital markets for three years with respect to the 2007 IPO prospectus disclosures case.

We see this development as a negative for DLF. We

believe this would effectively prohibit the company from dealing in securities which we believe will include issue of equities, REiTs, debentures and other such marketable securities. This may also prevent the proposed merger of DLF Cyber City Developers (DCCDL) into DLF.

We also highlight that DLFs total non-bank debt amounts to 45% of its total net debt of R19,800 crore as on FY14, refinancing of which may come under pressure.

This is the third negative legal development for DLF in the past two months. The Punjab and Haryana high courts had earlier ordered cancellation of allocation of 350 acres of land in Wazirabad, Gurgaon, to DLF.

Also, the Supreme Court had ordered deposit of the competition commission penalty of R630 crore, while the appeal is currently underway.