Motilal Oswal has given Neutral recommendation for DLF with a target price of Rs. 385 in its research report issued on Sep 02, 2022

Motilal Oswal’s research report on DLF

DLF FY22 annual report highlights a) Target to deliver double digit growth in residential bookings in FY23 b) Aggressive expansion in office segment and aim to double retail portfolio in 4-5 years and c) Sustained improvement in cash flows. Housing segment continues to witness strong demand well supported by tailwinds from the fundamental demand drivers. Consolidation amongst larger and credible brands continues to be a key trend in the housing segment primarily driven by rising confidence towards developers will strong execution legacy. In FY22, DLF’s pre-sales increased 136% to INR72b driven by strong response to Camellias and new products (especially independent floors) and its identified launch pipeline will help it sustain the momentum. Company continue to maintain positive outlook for rental business and is consequently deploying capital to strengthen and grow the office portfolio (developing 5.3msf across Gurugram and Chennai). Given the recovery across the retail segment and consumption trends in our country, DLF has also initiated development of new set of malls across geographies with an aim to double retail presence in the next 4-5 years. In line with the growth plans, DLF has stepped up organizational capabilities by onboarding new function heads and has also strengthened project management and sales team to ensure strong execution.

Outlook

At current valuations, the surplus land in DLFU and DCCDL is valued at INR480b, which is in line with our estimated value, assuming a development timeline of 20 years for DLFU’s 151msf and 11 years for DCCDL’s 25msf, which is fair in our view. Maintain NEUTRAL with TP of INR385, implying an downside potential of 3%.

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