This Real Estate Company Booked Robust Presales Of Rs 20.5bn, Buy Stock For 22% Gains: HDFC Securities

HDFC Securities has a buy call on DLF Limited, a large cap Real Estate sector company (having a market cap of Rs 91,534.65 crore). The brokerage sees a potential upside of up to 22% with a target price of Rs 450 per share.

DLF Ltd with its subsidiaries, associates and JVs is engaged in real estate development, from the identification and acquisition of land to the planning, execution, construction and marketing of projects. It is also engaged in the business of leasing, generation of power, provision of maintenance services, hospitality and recreational services which are related to the overall development of the real estate business.

Stock Outlook & Returns

The last trade share price of DLF Limited's stock on the NSE is Rs 369.75 per share. The stock in a week has given 1.12% positive returns, whereas, in the past 3 months, it has given 3.47% positive returns. The shares fell 7.83% in the past 1 year. Long-term investments in the stock have produced multibagger returns. It gave 104.28% in three years and 103.38% in five years, respectively. 

Its ROE is 4.12%. Its recorded 52 week low level is Rs 294.70 per share on 20th June 2022, and its recorded 52 week high level is Rs 444 on 09 November 2021, respectively.

 

Financial highlights

Revenue came in at INR 13bn (-12%/-10% YoY/QoQ, a miss of 7%). EBITDA was INR 4.4bn (-5%/+5.6% YoY/QoQ, a beat of 9%). EBITDA margin came in at 33.5% (+258/+484bps YoY/QoQ, vs 28.6% est.). The share of profits and associates & JVs: INR 2.17bn (+43%/+3% YoY/QoQ). RPAT/APAT was INR 4.8bn (+26%/+2% YoY/QoQ, beat of 4%). DCCDL revenue was INR 13.7bn (+22%/+9% YoY/QoQ). EBITDA was INR 10.5bn (+21%/+9% YoY/QoQ) and PAT was at INR 3.6bn (+54%/+10% YoY/QoQ). EBITDA margin at the group level is expected at 35-36% for FY23E.

 

Robust presales; high-rise launches in coming quarters

Presales for Q2FY23, at INR 20.5bn (+36%/+1% YoY/QoQ), were robust, with Camellias bookings at INR 4.7bn (INR 3.5bn in Q1FY23) and new product booking INR 15.3bn in Q2FY23 (INR 9.5bn in Q1FY23). DLF has maintained its residential presales guidance of INR 80bn presales for FY23. Within the DCCDL operational rental portfolio, occupancy increased marginally to 90%, from 89% in Q1FY23. Downtown Gurugram Ph-1 commenced operation and contributed (4% on annual basis) to office rentals (+14%/+5% YoY/QoQ). DLF is focused on launches in Panchkula and Golf course extension area. It is also coming up with high-rise launches in H2FY23. The last tower in One-Midtown is expected to launch by Q1FY24.

 

Robust balance sheet

DLF generated a cash surplus of INR 4.1bn, which helped reduce net debt to INR 21.4bn, as of Sep-22, from INR 22.6bn, as of Jun-22; net D/E at 0.06x (vs. 0.06x at Jun-22 end). Net debt at the DCCDL level increased to INR 193bn vs INR 188bn, as of Jun-22. Collection during the quarter was INR 12.5bn (-18%/+16% YoY/QoQ). Collection from One-Midtown (JV) is not included and was INR 4bn in Q2FY23 and INR 4.5bn is expected in Q3FY23.

Buy for a target price of Rs 450 per share

During Q2FY23, DLF booked robust presales of INR 20.5bn (+36%/+1% YoY/QoQ) and maintained FY23 presales guidance of INR 80bn. For H1FY23, presales stand at INR 41bn (vs 25bn in H1FY22 and INR 73bn in FY22). During the quarter, it launched 3.8msf, with 3.1msf planned for H2FY23 (6msf launched in FY22). In value terms, INR 35bn worth of launches are planned for H2FY23 across Gurugram and Panchkula. Also, DLF has INR 88bn of inventory available. With the commencement of operation in Downtown, Gurugram (ph-1), DCCDL, rental income improved to INR 9.9bn (+20%/+7% YoY/QoQ), with improving occupancy at 90%. "Given (1) strong presales momentum supported by price hikes; (2) robust launch plans; and (3) an expected increase in office occupancy levels, we maintain BUY on DLF, with an unchanged Target Price of INR 450/share," the brokerage has said.

Disclaimer

The stock has been picked from the brokerage report of HDFC Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.