Maintain Buy on DLF - Management Meet - Motilal Oswal

DLF: Met management; FY11 sales guidance seems challenging; hinted at annual sales of 12-15msf and delivery of 10-11msf for FY12 and FY13; Expects asset sale to surpass Rs45b and net DER (x) to decline to 0.5-0.6x by FY12; Buy

DLF has leased ~4.2msf of commercial assets during 9MFY11 (v/s its guidance of 3-4msf for whole year). It has guided for 4-5msf going forward.

Despite outperformance in commercial leasing vertical, the management has not extended its FY11 guidance significantly.

The company has ~16msf of annuity assets under construction across NCR, Chennai and Hyderabad.

The management is hopeful of delivery of these properties over next 3-4 years and hence confident of maintaining leasing velocity of 4-5msf for FY12 & FY13.

We expect DLF to be the key beneficiary of ongoing revival in the commercial and retail verticals across different micro-markets. Key near-term catalysts are (1) progress on debt de-leveraging, (2) revival in the commercial and retail verticals, (3) successful REIT listing at an attractive cap-rate, and (4) monetization of its Mumbai property. DLF trades at a 44% discount to our FY13E NAV of Rs397 (40% discount to our FY12E NAV of Rs367). Maintain Buy.

Source : Equity Bulls

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