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Yes Securities Report
DLF Ltd. achieved strong presales of Rs 22.3 billion in Q2 FY24 backed by the strong sales for ‘The Camellias' DLF5, Gurugram (Rs 7.2 billion); New Product (Rs 9.9 billion); Grand Enclave, Panipat (Rs 1.6 billion) with steady sales of other projects and reiterated presales guidance of +Rs 130 billion for FY24E.
DLF collected Rs23.6bn for Q2 FY24. DLF plans to enter Mumbai through the SRA project under the joint development agreement model. Project will have a total saleable area of 3-3.5 million square feet in Andheri-West, of which the company plans to launch ~0.9 msf in next nine-12 months.
Non special economic zone office assets are recovering fast with incremental leasing traction and now SEZ portfolio also started showing traction with occupancy inching up to 85% (82% in Q1 FY24).
DLF is expected to generate free cashflow of ~Rs 65 billion over FY24-25E.
We have aligned our average price realisation assumption to the recent booking trend witnessed. Hence our revenue/Ebitda/profit after tax estimates for FY24E moved up by 15%/27%/15% and for FY25 is up by 17%/27%/15% respectively.
We valued residential business now at Rs 183.6 billion and believe DLF Cyber City Developers Ltd., with its 39.6 msf operational portfolio and ~5.3 msf under-construction projects, is on track to achieve Rs 48 billion net operating income by FY25 hence valued DCCDL at Rs 249.8 billion (DLF's share and net of debt).
DLF has shown capability of monetising its land efficiently (in last 24 months, launched ~18 msf and achieved ~15.8 msf presales) thereby we expect DLF to monetise 146 msf with good pace too; valued at Rs 487/share.
DLF has turned net cash positive to Rs 1420 million and is expected to maintain it.
Sustained demand in residential and pick up in the leasing (including SEZ), deleveraged balance sheet along with DLF's long standing track record gives us confidence.
Hence upgrade stock to 'Buy' rating with target price of Rs 678/share (weighted average cost of capital 11.5%, Office Cap Rate 8.5%, Retail Cap rate 7.25%)
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