DLF expansion was a Boon, the Size now a Bane

Rapid expansion aided real estate firm, DLF build a brand and scale up during
the real estates boom phase, but its size has now has become its bane.
Positive news on the sales of non-core assets might have helped in supporting
the stock at lower levels. However, this has hardly done much to ease the
balance sheet pressure and enhance operating cash flows for the firm.
Consolidated net debt has surged from Rs.8,526 cr in FY14 to Rs.22,120 cr at
the end of June 2016. Paring this down even more requires sales recovery,
which is not happening at the pace at which it should. DLFs June quarter net
sales fell by 21 per cent
over a year ago.
Meanwhile, DLF share
price was trading up
2.02 per cent at
Rs.156.85 on the NSE
today.The stock opened
at Rs.155.45 from a
previous closing of
153.75. The current
market cap of DLF
amounts to 27428.20
(Cr) while its book value stands at 153.37.
Quarterly sales:
If we look at the last 8 quarters revenue sales, the company seems not in a
very good shape. The sales pickup isnt enough to ease cash flow stress in the
coming term. Quarterly sales booked have consistently been low at 0.2-0.9
million square ft. with a downward bias. The June quarter, in fact, had no sales
from existing completed projects. Also, Rs.270 cr-worth of legacy bookings
was discarded. On top of this, piled up, the huge closing balance of existing
projects. Albeit this has been reducing, the companys June quarter closing
balance was 21.9 million square ft. The balance sheet for FY16 pins the

inventory at Rs.17,000 cr, which is a grave concern as it is close to twice the

annual sales.
The National Capital Region and the DLF Cyber City Developers Limited:
The major issue, perhaps, is that the National Capital Region, where the real
estate company has a major exposure, is saddled with enormous inventory.
DLF is left holding a huge land bank in a region which might not be of much
use in the present conditions. Meanwhile, the investors are patiently awaiting
promoters to sell a stake in DLF Cyber City Developers Limited. The stock
gained about 33 per cent since the month of April on this news. Albeit this sale
has the potential to yield a cash inflow which can cut debt drastically, it is only
a steady rise in sales of its residential properties that can generate steady cash
flows to take the firm into a novel growth phase.
Please visit DLF share price history to know more about the financials and
fundamentals of the scrip.
Disclaimer
The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal
views of the research team. Users are advised to use the data for the purpose of information and rely on their own
judgment while making investment decision.
Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022

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Research Analyst/ his Relative:

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Article Written by
Salman Hashmi