Buy DLF; target of Rs 236: HDFC Securities
HDFC Securities’s research report on DLF
DLF’s 2QFY18 PAT came in 81% below estimates, on account of weak residential revenue recognition. No green shoots yet on B/S recovery, as (1) DLF has reopened sales only from 1-Nov-2017, post RERA compliance, (2) This impacted pre-sales over last 5 months (sales were closed since 1-May-2017), (3) Net cancellation of Rs 1.3bn, (3) Weak collections and a step-up in construction of projects nearing completion have resulted in Rs 17bn increase in net debt vs FY17.
With projects re-opening, pre-sales will pickup from 3QFY18E. Further, GIC has received CCI approvals for DCCDL deal and fund flow including that from DLF Promoter/QIP is expected in FY18E. As the impact of demonet has receded, we reduce the land bank discount of 10-15%. We maintain BUY with increased NAV- based TP of Rs 236/sh.
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