CRISIL Ratings has upgraded the rating on the long term bank facilities of DLF Limited (DLF) at 'CRISIL AA/Stable' from 'CRISIL AA-/Positive' and reaffirmed the short term rating at 'CRISIL A1+'.
The upgrade in rating reflects improvement in business risk profile driven by all-time high sales booking, substantial liquidation of inventory, healthy launch pipeline and steady receivables. Further, financial risk profile of DLF has also strengthened marked by continued deleveraging and strong financial flexibility.
DLF registered sales of Rs. 6,060 crore (excluding JVs) in nine months of fiscal 2023, crossing the sales booking of Rs. 5320 crore last fiscal, driven by a healthy demand momentum, strong launch pipeline, and liquidation of unsold inventory. The strong demand momentum can also be seen from DLF's, exceptional sales booking of Rs. -8,000+ crore in 04 FY23 from its latest Arbour launch.
The total area sold in 9M of fiscal 2023 was 4.25 msf (excluding JVs) compared to 3.2 msf (excluding JVs) during the same period last fiscal. Company has also sold -4 msf of luxury apartments in 04 FY23, significantly exceeding earlier estimates.
Liquidation of inventory of Rs. 5,198 crores as on Dec, 2022 along with receipt of pending receivables of around Rs. 6792 crore as on Dec, 2022 from sales that have already been made will provide further stability to the cash flow, support construction costs and maintain debt at low levels.
The company has further reduced gross debt from Rs. 3,900 crore in fiscal 2022 to Rs. -3,100 crore estimated by fiscal 2023, due to prepayment of debt on account of strong collections. Consequently the debt/total assets is expected to reach 0.13 time in fiscal 2023 from 0.18 time the preceding fiscal and is expected to moderate further next fiscal.
Out of the outstanding gross debt of Rs. 3,840 crore as on December 31, 2022, -33% is lease rental discounting (LRD) debt against its commercial assets' portfolio, which further reduces burden on overall cash flows of DLF. The LRD debt is expected to reach -40% of the outstanding debt by the end of this fiscal. In the development business under DLF, liquidity is supported by cash and bank balance of Rs 1,749 crore as on December 31, 2022. The company emphasises to continue with its focus on debt reduction over the medium term.
The cash flow of DLF would also continue to be supported by the dividend income received from DLF Cyber City Developers Ltd (DCCDL; rated 'CRISIL AA/Stable'; joint venture [JV] of DLF with GIC; DLF has two-third stake in DCCDL), the rental arm of the group.
These strengths are partially offset by susceptibility to risks and cyclicality inherent in the real estate sector along with large contingent liabilities and pending litigation.
Shares of DLF Limited was last trading in BSE at Rs. 352.45 as compared to the previous close of Rs. 348.60. The total number of shares traded during the day was 52178 in over 1523 trades.
The stock hit an intraday high of Rs. 353.90 and intraday low of 346.55. The net turnover during the day was Rs. 18282028.00.