The launch of Mall of India in Noida this year and an announcement by DLF, a real estate major, regarding an amended agreement to sell its 32 DT cinemas screens to multiplex operator PVR at a revised consideration of Rs 433 crore has brought DLF shares in limelight in the recent past.
On a year-to-date basis, shares of the realty company outpaced benchmark BSE Realty index by rising 7 per cent till May 31, 2016, whereas the real estate index climbed 3.64 per cent during the same period.
Sudip Bandyopadhyay, chairman of Inditrade Capital said, “DLF is doing the right things by selling unrelated assets which will help the company to reduce debt levels.”
In the commercial space, DLF continues to experience uptick on rentals as forecasted supply in office space has not materialised and most of the inventory for leasing in Cybercity has been extinguished, prompting the company to start a new office project – Cyber Park, around 2.2 msf, at a “prime” location just opposite Oberoi and Trident Hotels, Gurgaon.
The company also launched Mall of India in April 2016 which is a nearly 2 msf destination mall with around 90 per cent leasing of the retail establishments with DT cinemas operational. The company is also looking to commence a luxury mall in Chanakyapuri in the last quarter of the ongoing financial year 2017.
For the quarter ended March 31, 2016, DLF reported net profit of Rs 132.39 crore, down 22.86 per cent, against Rs 171.62 crore in the corresponding quarter a year ago. For the financial year ended March 31, 2016, the company reported a growth in consolidated net profit after seven years. Net profit of the company jumped 1.69 per cent to Rs 549.39 crore from Rs 540.24 crore last year.
As on March 31, 2016, non-current liabilities of DLF stood at Rs 24,611 crore as compared to Rs 20,396 crore last year. Cost of debt on a consolidated basis has moved down from 12.5 per cent as on March 31, 2015 to 11.54 per cent as on March 31, 2016.
DLF expects to get expression of interest from potential investors from June onwards to acquire promoters’ 40 per cent stake in its rental arm DLF Cyber City Developers Ltd (DCCDL) for an estimated Rs 12,000-14,000 crore.
Crisil has revised its rating outlook on Long Term Bank facilities and Debt instruments of DLF Ltd from “Negative to Stable ‘”.
Both technical and fundamental analysts are looking bullish on DLF shares. Chandan Taparia, technical analyst, Anand Rathi Financial Services said, “DLF has been holding the gains from last four months and sustained buying is being witnessed in the counter at every small declines. Earlier it used to be a high beta stock with the negative trend but from last couple of weeks it remains resilient at the time of market declines and participates with the market rally. It has multiple support near Rs 118-119 zones and holding above Rs 132 may start the next up move towards Rs 142-145 zones. It has surpassed its falling supply trend line and trading above all the short and medium term moving averages but as the long-term trend is still under pressure and it is among the wealth creators favourite as the stock not done well over the last five years.”
According to DLF, higher income levels and improved sentiment will improve absorption levels with pickup in GDP.
G Chokkalingam, founder, Equinomics Research & Advisory said, “Real estate stocks were hammered heavily in the past five years. We witnessed some low level buying in DLF with some foreign stakeholder also invested in rental business model boosted market sentiments. I think economy will improve further in the next couple of years. Investors can buy DLF shares for upside of nearly 50 per cent in the next 2-3 years.”
DLF is one of India’s largest real estate companies that has over 60 years track record of sustained growth, customer satisfaction, and innovation. The company has 288 million square feet (approximately) of development potential with 45 million square feet of projects under construction.