Launch portfolio to support sales momentum for real estate major DLF

The bookings or pre-sales of the country’s largest listed developer in the July to Septe­mber quarter of 2023-2024 (Q2FY24) were up 9 per cent over the year ago quarter at Rs 2,228 crore. Though there were no significant launches, the performance was above estimates and largely driven by momentum in the existing portfolio.  While the company launched projects in Q2 with an area of 0.2 million square feet and sales potential of Rs 440 crore, its target for the current financial year (FY24) is 11.2 million square feet with a potential of Rs 19,700 crore.
 

The available inventory of Rs 4,244 crore coupled with the planned launches in FY24 should help the company hit its bookings target of Rs 13,000 crore. The sales in the qua­rter were led by the premium Cam­ellias project, which had bookings of Rs 720 crore. New launches saw sales of Rs 1,340 crore of which the share of projects launched in the September quarter were about Rs 350 crore. 
 

Say Murtuza Arsiwalla and Abhishek Khanna of Kotak Institutional Equities: “DLF has fully capitalised on improving demand trends in Gurgaon by offering a wide array of products at different price points and regular intervals. The lau­nch of Rs 19,700 crore of inventory in FY24 should support our pre-sales estimate of Rs 16,200 crore. The brokerage is positive on the stock and has an add rating.”

 

Given the healthy sales and collections (up 88 per cent y-o-y and 50 per cent sequentially), the cash flow from operations were at record levels of Rs 2,360 crore. This has helped the development segment, which had a gross debt of Rs 3,012 crore turn net cash positive at the end of the quarter at Rs 142 crore. The income from its rental portfolio was up by 9 per cent to Rs 1,069 crore. The growth was led by the retail segment, which posted a sales growth of 15 per cent, while the office portfolio revenues grew by 7 per cent. The company has an operational portfolio of 39.7 million square feet. Overall, the occupancy levels for the rental business stood at 92 per cent as compared to 88 per cent and this was led by 300 basis points increase in office occupancy sequentially to 91 per cent. The retail occupancy was steady at 98 per cent. 
 

Motilal Oswal Research expects the rental business to register an annual growth of 13 per cent over FY23-25 to Rs 5,100 crore. The brokerage expects the growth trajectory to remain steady for at least 12-15 years, considering the 24 million square feet of development potential in existing assets.
 

Abhishek Lodhiya and Sonu Upadhyay of YES Securities have upgraded the stock to ‘buy’ citing sustained demand in residential segment and pick up in the leasing, deleveraged balance sheet along with DLF’s long standing track record.