Brokerages retained their constructive stance on DLF Ltd. despite the real estate developer reporting a weaker-than-expected June quarter, with analysts arguing that the company's balance sheet and upcoming launch pipeline remain key long-term positives.
Jefferies maintained its Buy rating on DLF with a target price of Rs 815, describing the quarter as a "weak start" but highlighting that the company continued to generate healthy cash despite softer residential sales.
The brokerage noted that pre-sales remained subdued because of limited project launches, leading to a 15% year-on-year decline in cash collections. However, DLF still generated around Rs 1,050 crore of free cash flow during the quarter, reinforcing its strong cash accumulation story.
Jefferies also pointed to 9% year-on-year growth in lease income at DLF Cyber City Developers Ltd. (DCCDL), saying the rental portfolio continues to underpin profitability.
Morgan Stanley also retained its Equal-weight rating, with a target price of Rs 730, but termed the June quarter "weaker than expected."
The brokerage highlighted that Q1 pre-sales of Rs 660 crore fell well short of its Rs 1,000 crore estimate, primarily due to the absence of major launches. Residential collections also came in below expectations at Rs 2,300 crore, while revenue of Rs 1,280 crore and EBITDA of Rs 150 crore reflected the slowdown in the development business.
Despite the operational miss, Morgan Stanley noted that DLF's financial position remains a key strength. The brokerage said the development business remains debt-free and continues to hold a sizeable net cash position, while recurring rental income from its commercial portfolio provides stability to earnings.
DLF reported a 4.1% year-on-year increase in consolidated net profit to Rs 794 crore, although revenue declined 52.9% and EBITDA fell 58.9% from a year ago. EBITDA margin narrowed to 11.7% from 13.4%.
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