The stock of real estate major DLF was up 8 per cent on Friday after the company reported a 29 per cent growth in revenues for the June quarter when compared with the same period last year. Sequentially too, the company’s revenues were up 14 per cent. Operating profit jumped 37 per cent y-o-y to Rs 1,540 crore.

Booking value increased to Rs 1,035 crore in the June quarter, up from Rs 308 crore a year ago. Leasing activity was also robust for its office and retail properties.

The negatives

But the results were disappointing on a few counts. There was a drop in area sold – from 0.38 million sq ft last year to 0.16 million sq ft in the latest June quarter. Net profit declined 5 per cent y-o-y due to higher finance cost and lower other income. Interest expense jumped 8 per cent y-o-y to Rs 604 crore.

The company has a net debt burden of nearly Rs 21,000 crore as of March 2015. DLF has been selling non-core assets to reduce debt and cut interest expense. The company agreed to sell its cinema exhibition business, DT Cinemas – a non-core asset – to PVR for Rs 500 crore in June 2015. The company also plans to seek project level private equity funding. These joint ventures along with sale of other non-core assets should help raise around Rs 3,000 crore in 2015-16, according to the management.

REITs

Also, DLF intends to issue non-convertible debentures or other debt instruments such as bonds to raise funds to the tune of Rs 5,000 crore. These may be offered in one or more tranches through private placement on preferential basis, as per DLF’s filing with SEBI in June 2015. The company also intends to form 2 real estate investment trusts (REITs) to monetise its office and retail assets. These measures should help cut debt and increase profit.

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