DLF Ltd. shares remained under pressure after Bank of America downgraded the real estate developer to 'Underperform' from 'Buy', arguing that the company's residential sales growth could slow as it prioritises pricing over volumes.
The brokerage also cut its target price to Rs 695 from Rs 800, implying limited upside from current levels. DLF shares were trading around 1.25% lower at Rs 641 in early trade on Thursday after ending the previous session at Rs 649.10, when the stock fell following its June-quarter earnings.
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BofA believes DLF's strategy of maximising value rather than chasing volumes is likely to soften booking growth over the coming quarters. The brokerage said the company is increasingly dependent on the timely launch of new residential projects, making execution a key variable for sustaining growth.
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The downgrade comes after DLF reported a mixed set of June-quarter results. Revenue and profitability missed expectations as pre-sales weakened because of fewer launches, although the company continued to generate healthy cash flows and maintained a strong balance sheet.
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