ICICI Securities
DLF (Buy)
CMP: ₹156.9
Target: ₹250
DLF was reeling under high debt levels in its development business (residential and commercial sales) over FY14-FY17. Post the sale of promoter stake in the rental arm DCCDL to GIC Singapore in Q3FY18, promoters have since infused ₹9,000 crore in DLF, which has helped the company to, significantly, bring down debt levels.
Post its qualified institutional placement fund raise of ₹3,200 crore and balance infusion of promoter funds of ₹2,250 crore, DLF’s ex-DCCDL net debt had reduced to ₹3,400 crore and post the settlement of DCCDL payables by DLF of ₹8,700 crore, DLF’s net debt as of December 2019 stands at ₹4,900 crore. With regard to debt reduction, DLF is targeting to bring this down to around ₹2,500 crore through monetisation of land parcels and exiting joint ventures in FY21E.
We revise our target price to ₹250/share (earlier ₹266) factoring in longer sales cycle for premium residential projects and upgrade our rating to ‘buy’ from ‘add’ post the decline in stock price over the last month.