DLF shares soar 16.5% over stake sale completion news

Real estate giant DLF's shares surged 16.5 per cent after news of a possible stake sale deal completion hit the Street.

Around 40 per cent of DLF Cyber City Developers (DCCDL) would be sold for Rs 13,000 crore to an affiliate of Singapore's GIC, a deal which might be complete by later this month, company sources have indicated.

Putting a stop to a five-day losing streak, the stock opened at Rs 160 and saw a high of Rs 184.20. Last week, DLF had reported a decline of 58 per cent in net profit at Rs 109 crore for the quarter ended June. A source in the company said absolutely no sale of residential properties since May, triggered by enforcement of the new real estate regulation law, Rera, and later the goods and services tax (GST), had hit hard.

Net profit was Rs 261.8 crore in the year-ago period, the company said in a BSE filing. Total income, however, rose by nine per cent to Rs 2,211 crore. The profit declined as the company had posted an exceptional profit item of Rs 329.1 crore in the year-ago period, was the explanation.

DLF said uncertainty in operations continues in the sector, with each state having a different timetable for adoption of the central regulatory law, including the subsequent enactment of rules.

"The introduction of GST, from July 1, also added to the uncertainty, resulting in elongation of sales cycle. Back-end integration challenges continued, as it was also dependent upon the timing of the GST registrations of vendors. The company is fully compliant with the GST regime. Despite growth in the economy, the demand for residential real estate continues to be soft," it said.

In October 2015, DLF had announced that its promoters would sell their entire stake in DCCDL, which holds the bulk of the group's commercial assets. In March, the company decided to sell 40 per cent of DCCDL for Rs 13,000 crore to an affiliate of Singapore's GIC. The company has been for the past few weeks getting the various regulatory approvals. Sources said GIC had completed its due-diligence process.

"The transaction for sale of CCPS in DCCDL is in advanced stages of discussion. The demand for office leasing space continues to be good. Development of two new towers in the Chennai SEZ is expected to be completed in FY18, while development of Cyber Park, Gurgaon, is expected to be completed in FY19," it has said after announcing its results.