DLFU delivered a steady set of Q3FY24 earnings, with an exceptional growth in its operational performance. Pre-sales rose 261% YoY and 306% QoQ to a record INR9,047cr given the tremendous response to the launch of DLF Privana South. Nearly 95% bookings accrued from new launches. With this, DLFU surpassed its FY24 guidance, clocking pre-sales of INR13,315cr in 9M. In FY25, it has lined up launches (10mn sq. ft.) with a GDV of ~INR32,000cr. It added a 29-acre (7.5mn sq. ft.) parcel on the Golf Course Extension Road in Gurugram in Q3FY24. Led by the robust pre-sales, it saw 80% YoY growth in collections, resulting in a 75% growth in operating cash flow to INR1,108cr. Net cash strengthened to INR1,246cr from INR142cr in Q2FY24. Revenue from its annuity portfolio under DCCDL grew 8% YoY to INR1,476cr aided by higher occupancy in the office portfolio. With the floor-wise denotification now in force, DLFU has applied for de-notifying 1.1mn sq. ft. which will be up for leasing in Q1FY25. We are upbeat on DLFU’s growth story, given its robust launch pipeline, brand recall, favourable dynamics in its home turf, improving annuity income, and market consolidation. Led by a robust launch pipeline, steady project acquisitions, and increase in the sales velocity, we upgrade our TP to INR1,021. Maintain ‘BUY’.
Robust growth in its residential business; launch pipeline strong
Pre-sales grew 261% YoY and 306% QoQ to INR9,047cr led by an exceptional response to DLF Privana South (a luxury high rise) that was fully sold out at its launch, garnering bookings of ~INR7,200cr. Two other launches, Central 67 (shop cum offices, Gurugram) and The Valley Orchard (independent floors, Panchkula), recorded bookings worth ~INR1,400cr. The rest of the bookings were from existing projects. In FY25, it has lined up 10mn sq. ft. of launches with a GDV of ~INR32,000cr (luxury/premium/ commercial: INR24,200cr/INR7,300cr/INR500cr). Post FY25, it plans to launch 22mn sq. ft. (INR46,850cr). In total, it has a pipeline of ~INR78,850cr (32mn sq. ft.), to be launched in the next four years. To aid growth, it continues to add land. In Q3FY24, it added a 29-acre parcel on the Golf Course Extension Road with a saleable area of 7.5mn sq. ft. It expects pre-sales to exceed INR15,000cr in FY25. EBITDA margin from new launches is expected to cross 45%.
Steady growth in commercial leasing, robust occupancy in retail assets
DCCDL reported a revenue of INR1,476cr (up 8% YoY and 1% QoQ), with rental income growing 9% YoY and 2% QoQ to INR1,089cr, led by greater office occupancy and a higher rental rate. Retail revenue grew 21% YoY on higher consumption. Office revenue grew 6% on new net leases and a higher rental rate. Office occupancy improved by 200bp YoY to 91% (flat QoQ) while retail occupancy was flat at 98% (flat QoQ). EBITDA for DCCDL grew 6% YoY and 2% QoQ to INR1,126cr, with a margin of 76.3% (versus 77.8% YoY and 75.8% QoQ). Pre-leasing of under-development properties improved to 91% from 89% QoQ. Rentals from Downtown Chennai/ Downtown Gurugram are expected to flow in from Q1FY25/Q1FY26. With the floor-wise denotification now in force, DLFU has applied for de-notifying 1.1mn sq. ft. and expects occupancy in SEZ assets to improve in the next three-to-four quarters.
Cash flows impress, DevCo’s cash position strengthens further
Led by strong pre-sales, DLFU reported record collections of INR2,516cr (up 80% YoY), resulting in a strong quarterly OCF (post-interest) of INR1,108cr (up 75%). This aided the DevCo to improve its net cash position to INR1,246cr as of December from INR142cr as of September 2023. Cost of debt fell 1bp QoQ to 8.11%. Net debt in DCCDL fell 2% YoY to INR18,114cr.
Maintain ‘BUY’ with a SoTP-based TP of INR 1,021
We remain upbeat on DLFU’s growth prospects, driven by strong sectoral tailwinds (industrywide consolidation, record low inventory in its home market, and greater preference for branded luxury inventory), an extensive launch pipeline, and expansion of its annuity portfolio. A strong Balance Sheet with consistent cash flow lends further comfort. We upgrade our TP to INR 1,021 (INR 671 earlier) on a higher sales velocity and a strong launch pipeline. Maintain ‘BUY’.
Leave a Reply