DLF

Financial Statement Analysis

Industry Overview - Real Estate

Indias construction market is expected to be the worlds 3rd largest by 2020

Surge in demand for residential properties due to increased urbanization,

rising household income and in commercial and retail space due to growing
economy
4th largest sector in terms of FDI inflows , which is expected to grow to
US$25 Billion in 10 years
Govt has allowed FDI of upto 100% in development projects for townships
and settlements
It is a localised, fragmented market with few large , pan-India players like
DLF, Unitech
Operating model has shifted from sales to a lease and maintenance form

Industry Overview - Real Estate

Low threat of new entrants as a result of uncertain investment timelines due

to long gestation periods

Ease of Housing Finance :
Additional deduction of up to USD1,841 on interests payable on home loans of up to

USD46,032 announced in the Union Budget 201314

To liberalise scheme of interest subversion of 1 per cent on home loan by including loans of
up to USD31,250 for houses that cost up to USD52,080

The DLF Story..

Indias largest real estate company by value with a revenue of USD 1.4 Billon

in FY14
Relatively weak threat of new entrants

Rivalry is strong due to the large no. of

real estate firms operating in India (65
in total) and the difficulty to differentiate

Bargaining power of the buyers is strong.

Bargaining power of suppliers is very strong

The threat of substitute in real estate business
and its impact on profitability of the industry is
quite ambiguous and difficult to establish given
the economic downturns and the recovery mode
of the real estate business cycle.

Credit Rating
ICRA has reaffirmed rating of [ICRA] A for `4,000 crore - NCD programme. It

has also reaffirmed rating at [ICRA] A for `11,329 crore line of Credit (Term
Loan ` 7,589 crore, Fund Based Limits `2,580 crore and Non-fund Based
Limits ` 1,160 crore).
CRISIL has reaffirmed rating of CRISIL A for ` 5,000 crore NCD Programme.

Further, for total bank loan facilities of ` 15,730 crore, it has assigned CRISIL
A/Stable for Long Term facilities and CRISIL A2+ for Short Term facilities.

Accounting Policy
The Financial statements have been prepared on a going concern basis under the historical

cost convention on accrual basis in accordance with the GAAP in India.

Intangible Assets and Amortization
Software which are not integral part of the hardware are classified as intangibles and are
stated at cost less accumulated amortisation. These are being amortised over the estimated
useful life of 5 years, as determined by the management.
The Company has acquired exclusive usage rights for 30 years under the BOOT scheme of
the PPP scheme in respect of properties developed as automated multi-level car parking
and commercial space and classified them under the Intangible Assets-Right on Building
and Right on Plant & Machinery.
Fixed Assets and Depreciation
Fixed assets are stated at historical cost less accumulated depreciation and impairment.
Leasehold land, under perpetual lease, is not amortised. Leasehold lands, other than on
perpetual lease, are being amortised on time proportion basis over their respective lease
periods.

Accounting Policy
Inventory
Land and plots other than area transferred to constructed properties at the commencement
of construction are valued at lower of cost/approximate average cost/ as re-valued on
conversion to stock and net realisable value.
Cost includes land (including development rights and land under agreements to purchase)
acquisition cost, borrowing cost, estimated internal development costs and external
development charges.
For SEZ zones, cost of land is not included to Total Cost.
Development rights represents amount paid under agreement to purchase land/
development rights and borrowing cost incurred by the Company to acquire irrevocable and
exclusive licenses/development rights in identified land and constructed properties, the
acquisition of which is at an advanced stage.
Construction/development material is valued at lower of cost and net realisable value.
Rented buildings and related equipments are valued at lower of cost (less accumulated
depreciation) and net realisable value.

Accounting Policy
Revenue from constructed properties are recognized on percentage of

completion method.
Borrowing costs that are attributable to the acquisition and/or construction of
qualifying assets are capitalised as part of the cost of such assets. All other
borrowing costs are charged to the statement of profit and loss as incurred.

Horizontal analysis or, Trend analysis

Key findings
Total debt has reduced over the years, thus improving the capital gearing
2011

Change(%)

2012

Change(%)

2013

Change(%)

2014

Change(%)

Overall change(%)

Secured Loans

19938

3%

19036

-5%

17836

-6%

15639

-12%

-19%

Unsecured Loans

1714

-28%

1186

-31%

1241

5%

944

-24%

-60%

Total Debt

21652

0%

20223

-7%

19077

-6%

16583

-13%

-23%

They are investing less and selling even lesser

Capital Work in Progress

2011

Change(%)

2012

Change(%)

2013

Change(%)

2014

Change(%)

Overall change(%)

10234

-8%

8993

-12%

7834

-13%

5979

-24%

-46%

Inventories
20%
16176
8%
17646
9%
18489
5%
The liquidity
and 15039
cash position
has improved
but not
significant
enough

48%

2011

Change(%)

2012

Change(%)

2013

Change(%)

2014

Change(%)

Overall Change(%)

Cash and Bank Balance

1322

97%

1506

14%

1844

22%

2442

32%

264%

Net Current Assets

18073

-1%

17421

-4%

17990

3%

20275

13%

11%

Horizontal analysis or, Trend analysis

Key findings cont.
Profits have come down significantly over the years on account of increasing expenses
and flat sales and margins are under pressure
2011

Change(%)

2012

Change(%)

2013

Change(%)

2014

Change(%)

Overall change(%)

Net Sales

9561

28%

9629

1%

7773

-19%

8298

7%

11%

Operating Profit

3753

4%

3904

4%

2626

-33%

2485

-5%

-31%

PBDIT

4337

10%

4483

3%

3916

-13%

3647

-7%

-8%

PBDT

2631

-7%

2236

-15%

1602

-28%

1184

-26%

-58%

Profit Before Tax

2000

-19%

1548

-23%

806

-48%

521

-35%

-79%

Expenses have grown by 51% in last 5 years, even though sales figures are flat

2011

Change(%)

2012

Change(%)

2013

Change(%)

2014

Change(%)

Overall change(%)

Other Manufacturing Expenses

4300

66%

3967

-8%

3356

-15%

3880

16%

50%

Miscellaneous Expenses

909

590%

1117

23%

1114

0%

1264

13%

859%

Total Expenses

5808

51%

5725

-1%

5147

-10%

5813

13%

51%

Interest

1706

54%

2246

32%

2314

3%

2463

6%

122%

Vertical analysis or, Common size analysis

Key findings
Gearing has improved over the years
2010

2011

2012

2013

2014

Networth

58%

54%

57%

59%

63%

Total Debt

41%

45%

42%

41%

36%

Overall liquidity cash position is not looking good , even though it has improved over years
2010

2011

2012

2013

2014

Inventory/Total assets

20%

25%

26%

27%

29%

Inventory/current assets

84%

84%

83%

83%

82%

Cash and Bank Balance

1%

3%

3%

4%

5%

Vertical analysis or, Common size analysis

Key findings cont.
Expenses have gone up dragging down profitability
2010

2011

2012

2013

2014

Other Manufacturing Expenses

33%

42%

39%

37%

41%

Miscellaneous Expenses

2%

9%

11%

12%

13%

Total Expenses

49%

57%

56%

57%

61%

Interest

14%

17%

22%

26%

26%

Profitability has come down drastically

2010

2011

2012

2013

2014

Operating Profit

46%

37%

38%

29%

26%

Profit Before Tax

32%

20%

15%

9%

6%

Reported Net Profit

22%

16%

11%

7%

6%

Debt coverage Ratios

Interest Coverage Ratios

DLF

DB Realty

Godrej Prop

Simplex Realty

Indiabulls Real

25

20

19.41

16.24
15

10.82

10

9.13
7.22

7.4

5
3.59

3.53
3.33
1.94
1.81
1.35
0

0.02
2014

1.36
0.83

2.37
1.7
1.16

2.51
2.28
2.17

2013

2012

2011

1.48
1.33
2010

Debt coverage Ratios

Total Debt To Owners Fund

DLF

DB Realty

Godrej Prop

Simplex Realty

Indiabulls Real

1.2

1.13
1.05

0.92
0.85

0.87
0.81

0.8

0.8

0.67
0.57

0.6

0.56

0.4
0.31

0.27

0.2

0.14
0.07

0.1

0.07
0.06
0

0.02
0

0.05
0

0.02
0

2013

2012

2011

2010

0
2014

Debt coverage Ratios

Financial Charges Coverage Ratio

DLF

DB Realty

Godrej Prop

Simplex Realty

Indiabulls Real

25

20.68
20
16.4
15
11.72
10.13
10
7.38

3.56
3.39
1.96
1.85
1.61
0.14

7.55

3.48

1.71
1.02

2.3
2
1.19

2.51
2.43
2.3

2013

2012

2011

1.54
1.32

0
2014

2010

Debt coverage Ratios

Financial Charges Coverage ratio Post tax

DLF

DB Realty

Godrej Prop

Simplex Realty

Indiabulls Real

18
16.49
16
14
12
10

10.76
9.84
8.79
7.38

7.53

6
4
2

3.39

3.11
3.02
1.89
1.87
1.53

1.65
1.21

2.23
1.84
1.14

2.36
1.9

2013

2012

2011

2.88
2.85
1.48

-0.08
0
2014
-2

2010

Investment Valuation Ratios

Investment Valuation Ratios Analysis

Price to Book Value
Price to Earnings, Operating Cash Flow & Free Cash Flow
Price to Sales
EBITDA Multiplier
Industry Benchmarking

Investment Valuation Ratios

Price to Book Value Ratio

Price to Book Value Ratio
3

2.5

1.5

0.5

0
01/01/2010

01/07/2010

01/01/2011

01/07/2011

01/01/2012

01/07/2012

01/01/2013

01/07/2013

01/01/2014

01/07/2014

*Data Source: Moneycontrol

Investment Valuation Ratios

P/B Ratio Analysis
2.5

1.5
DLF - P/B
S&P BSC india reality index - P/B
1

0.5

0
22/01/2010

10/08/2010

26/02/2011

14/09/2011

01/04/2012

18/10/2012

06/05/2013

22/11/2013

10/06/2014

27/12/2014

*Data Source: Bloomberg

Investment Valuation Ratios

P/E, P/CFO and P/FCF Ratio

P/FCF

DLF - P/E
70

60

60

50

50

40

40

30

30
20

20

10

10
0
2009

2010

2011

2012

2013

2014

0
2009

2015

2010

2011

2012

2013

2014

2015

P/CFO
100
0
2009
-100

2010

2011

2012

2013

2014

2015

-200
-300
-400
-500

*Data Source: Moneycontrol

Investment Valuation Ratios

P/E Ratio Analysis
80

70

60

50
DLF - P/E

40

S&P BSC india reality index - P/E

30

20

10

0
06/07/2009

22/01/2010

10/08/2010

26/02/2011

14/09/2011

01/04/2012

18/10/2012

06/05/2013

22/11/2013

10/06/2014

27/12/2014

*Data Source: Bloomberg

Investment Valuation Ratios

Price to Sales Ratio

P/Sales
4.5
4
3.5

3
2.5
2
1.5
1
0.5
0
2010

2011

2012

2013

2014

*Data Source: Moneycontrol

Investment Valuation Ratios

EBITDA Multiplier
EBITDA Multiplier
30

25

20

S&P - EV/TTM EBITDA

15

DLF - EV/EBITDA
10

0
22/01/2010

10/08/2010

26/02/2011

14/09/2011

01/04/2012

18/10/2012

06/05/2013

22/11/2013

10/06/2014

27/12/2014

*Data Source: Bloomberg

Investment Valuation Ratios

DLF has paid a constant Dividend per share over the year of Rs 2

Dividend
Dividend Yield
Dividend Yield 5 Year Avg.

Dividend Growth Rate

Payout Ratio

DLF
1.41%

Industry
1.15%

0.84%

1.04%

0%

10.53%

60.1

17.49
*Data Source Investing.com

Investment Valuation Ratios

Benchmarking
Name

Investment Valuation Ratios

DLF

Industry

P/E Ratio

44.6

17.2

Price to Sales

2.1

2.75

Price to Cash Flow

43.3

24.93

Price to Free Cash Flow

8.21

25.19

Price to Book

0.92

0.78

*Data Source Investing.com, MoneyControl, Bloomberg

Ratio Analysis
Efficiency ratios

Inventory turnover

Inventory turnover

Column1

2011

2012

2013

Column1

2014

DLF

Godrej Properties

Indiabulls

15
DLF

0.64

0.6

0.44

0.45

Godrej Properties

0.66

1.43

1.53

0.99

10
5
0

Indiabulls

13.59

5.31

Debtor turnover

Debtors turnover
Column1

2011

2012

2013

2014

DLF

5.78

4.55

5.16

Godrej Properties

5.03

2.41

1.74

1.13

Indiabulls

44.36

8.44

7.35

3.89

50
40
30
20
10
0
2011
DLF

2012

2013

Godrej Properties

2014
Indiabulls

Ratio Analysis
Efficiency ratios cont

assets turnover

Total Assets Turnover Ratio

Column1

2011

2012

2013

2014

DLF

0.2

0.21

0.17

0.19

DLF

Godrej Properties

Indiabulls

0.3
0.2
0.1

Godrej Properties

0.2

0.15

Indiabulls

0.06

0.02

0.17

0.11

0
2011

2012

2013

2014

Days in WC

Number of Days In Working Capital

Column1

2010

2011

2012

2013

2014

DLF

430

833

651

760

882

30000

20000
10000
0

Godrej
Properties

1463

1493

2173

1992

2564

Indiabulls

10770

2004

6619

11435

27317

2010
DLF

2011

2012

Godrej Properties

2013
Indiabulls

2014