DLF rallies 5%; hits multi-year high on healthy March quarter results

Shares of DLF hit a multi-year high of Rs 456.50, as it rallied 5 per cent on the BSE in Monday’s intra-day trade after the firm reported a healthy 40 per cent year-on-year (YoY) growth in consolidated net profit at Rs 581 crore for the January-March quarter (Q4FY23), driven by strong margins and revenue mix. Revenue, however, was down 6 per cent YoY at Rs 1,576 crore.

The stock was trading at its highest level since October 2009. Thus far in the calendar year 2023, it has outperformed the market by surging 21 per cent, as against 1.9 per cent rise in the S&P BSE Sensex.

DLF said its residential business delivered a record performance by clocking new sales bookings of Rs 8,458 crore, reflecting a YoY growth of 210 per cent.

The company reported bookings of Rs 15,058 crore in FY23, doubling YoY, driven by major launches in Gurugram and Chandigarh Tri-city, which accounted for 80 per cent of the overall sales. Overall company launched ~10msf of projects in FY23. The company has guided for Rs 12,000 crore of presales in FY24 vs Rs 10,000-11,000 crore in FY23 led by strong launch pipeline.

The strong business performance led to a healthy surplus cash generation enabling significant strengthening the company’s balance sheet. Net debt now stands reduced to Rs 721 crore, one of the lowest levels.

Motilal Oswal Financial Services (MOFSL) expect the inventory churn to be at least 50-55 per cent in FY24, higher than the company's assumption of 40-45 per cent, which would ensure pre-sales runrate will sustain at Rs 15,000 crore. In a bull case scenario, if the company manages to maintain a similar inventory churn as FY23, it could achieve a 20 per cent growth, the brokerage firm said.

The brokerage firm believes the company can match its FY23 sales run-rate, driven by a strong launch pipeline of 11msf across the luxury and value segment. It increased FY24/25 pre-sales estimates by 70 per cent/32 per cent.

“DLF added 4.5msf of new projects into the launch pipeline and expects to launch 11msf of projects in FY24. At the current launch run-rate company will take atleast 15-20 years to monetize its balance 146msf of land bank which is inline with our assumption. We bake in the cash flows from revised project pipeline and roll forward our estimates, resulting in revised target price of Rs 440 (v/s Rs 415 earlier),” MOFSL said in result update.