Maintain BUY on DLF - Q2FY21 - Well placed to ride headwinds - HDFC Securities

Mr. Parikshit D Kandpal, Institutional Research Analyst, HDFC Securities

DLF reported Revenue/EBITDA/APAT at Rs 16.1/4.6/3.3 bn, ~2x/3.7x/3.5x our estimates, on back of revenue recognition from Camellias (Rs 7.5bn). Presales rebounded to Rs 8.5bn vs Rs 1.5bn QoQ. Excluding the sale of AMEX commercial campus, sales bookings stood at Rs 4.7bn, a decline of 35% YoY. While office portfolio remains robust with +98% collections, retail is inching towards recovery with footfall at 35-40% of pre-pandemic level. Gradual recovery in presales, strong launch pipeline and REIT plans for DCCDL augur well for re-rating. We maintain BUY on DLF, with unchanged TP of Rs 219, given healthy balance sheet and change our FY21/FY22/FY23 EPS estimates by 3.5/-3.9/-16.3% to front load revenue from Camellias project.

2QFY21 highlights: DLF registered consolidated revenue at Rs 16.1bn, - 6.2%/~3x YoY/QoQ and ~2x our estimates, as it started to recognize revenue from Camellias (Rs 7.5bn) in 2QFY21. EBIDTA margins also improved to 28.4% (20.4/0.3% 2QFY20/1QFY21), on the Camellias revenue recognition. Finance costs declined by 46/5% YoY/QoQ. Adjusting the provision (Rs 962mn) made against interest levied on overdue receivables, APAT came in at Rs 3.3bn, a rise of 9% YoY and ~3.5x our estimates.

Presales recovering; launches planned across categories: DLF reported sales booking at Rs 8.5bn, rise of 18% YoY. However, excluding the AMEX commercial sales, bookings declined by 35% YoY to Rs 4.7bn. Of Rs 66bn completed inventory, Rs 44bn is from Camellia, which we believe would see back-ended recovery, given the large ticket size. DLF is planning to launch 10 msf of mid-income housing from H1FY22 and expand commercial portfolio with the launch of Hines JV and new developments in DLF 5.

Balance sheet position comfortable: Consolidated net debt remained stable at Rs 52bn at the end of quarter (vs Rs 52bn on Jun-20 end), with net D/E at 0.15x. Net debt is likely to remain at the same level given the planned residential launches which will largely self-finance. The company also brought down interest cost from 9.7% in 1QFY21 to 9.1% during the quarter. DLF generated positive operating cashflow of Rs 2bn during 1HFY21.

Shares of DLF LTD. was last trading in BSE at Rs.164.75 as compared to the previous close of Rs. 158.3. The total number of shares traded during the day was 1370014 in over 13063 trades.

The stock hit an intraday high of Rs. 170.9 and intraday low of 156.8. The net turnover during the day was Rs. 226716211.

Source : Equity Bulls

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