Focus on cashflows, annuity biz strong…
About the stock: DLF, founded in 1946, is the largest publicly listed real estate company in India, with presence across residential, commercial and retail properties.
• DLF has a strong land bank (development potential of 188msf (70%+ in Gurgaon) of which ~22msf is under execution.
• DLF holds commercial assets at both parent level and through DCCDL (66.67% stake). Q4FY26/FY26 performance: DLF reported healthy pre-sales booking for Q4FY26 and FY26 of ₹ 3967 (+96% YoY) and ₹ 20143 crore (within guidance of ₹20000- 22000 crore despite halt in bookings at Dahlias in Q3FY26). Collections stood at ₹3301 (flat YoY, -35% QoQ) for Q4FY26 and ₹ 13517 crore up 15% YoY for FY26. DLF consolidated revenues stood at ₹ 2172 crore (-31% YoY and +8% QoQ) for Q4FY26 and ₹ 8552 crore (+7% YoY) for FY26 excluding DCCDL. Consolidated EBITDA for Q4FY26 and FY26 declined 42% and 1% YoY at ₹ 691 crore and ₹3070 crore respectively. Before exceptional items, PAT for FY26 grew 16% to ₹4256 crore, PAT for Q4FY26 declined 3% YoY to ₹1244 crore. DCCDL reported Q4FY26 rental income/EBITDA/ adj. PAT growth of 16.6%/14%/46% YoY at ₹ 1426 crore/₹ 957 crore/₹ 773 crore and FY26 rental income/EBITDA/ adj. PAT growth of 16%/18%/38% YoY at ₹5525 crore/₹ 3850 crore/₹ 2726 crore. The company’s net cash surplus (including RERA cash) stood at ₹ 14155 crore (+₹ 2495 QoQ).
Investment Rationale
• FY27 pre-sales guidance flattish, to focus on execution & cashflows: DLF conservatively guided for launch and pre-sales of ₹ 20,000 crore for FY27 (FY26 – ₹ 20,143 crore). FY27 launch pipeline projects include 1) Arbour Senior living 2) Hamilton II 3) Goa 4) Westpark phase II. Overall FY27 pre- sales bakes in 1) ₹ 13000-14000 crore from ₹ 20,000 project launches and 2) ₹ 5000-6000 crore from Dahlias. Its current launch pipeline of ₹ 1.14 lakh crore has over ₹ 60,000 crore projects which are yet to be launched, while it would unlock future phase of launch pipeline as per market demand and its execution strategy. Instead to chasing pre-sales, management intends to focus on execution and free cash flow generation over the medium term.
• Medium term ~₹ 10,000 crore rental income stay intact: DLF’s rental assets of ~50 msf are operating at high occupancy levels of 95% (area- wise) and 97% (value-wise). Exit rentals for FY26 stood at ₹ 7400 crore while it targets exit rentals of ₹ 8200 crore for FY28 (driven by 10-11% growth in existing portfolio with incremental growth from addition of three new malls) and ₹ 10,000 crore over the medium term (~76msf portfolio). Over the next 4-5 years, it expects NOI to grow in mid-teens and PAT at 20-25% CAGR.
Rating and Target Price
We retain Buy on the stock with a revised SOTP based price target of ₹ 810 (assigning nil premium to NAV)
