FY26 guidance retained despite weak Q3
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).
Q3FY26 performance: DLF reported weakest pre-sales booking of ₹ 419 crore (excluding Dahlias) over trailing 21 quarters for Q3FY26. As per management, new bookings in Dahlias were on hold in Q3 due to redesign for enhanced customer experience; bookings resumed now in Q4. However, collections were at record high at ₹ 5100 crore (up 64% YoY, up 91% QoQ). Higher revenue booking led to 32% YoY growth (up 23% QoQ) in consolidated revenues at ₹ 2020 crore for Q3FY26. Consolidated EBITDA declined 2.5% YoY (up 37.5% QoQ) at ₹ 390 crore. Higher other income YoY, lower tax outgo and adjusting for ₹ 60 crore one-off expense related to revised labour codes, its consolidated adjusted net profit grew 30% YoY (up 34% QoQ) at ₹ 1264 crore. DCCDL reported rental income/EBITDA/ adjusted PAT growth of 18%/18%/40% YoY at ₹ 1412 crore/₹ 1464 crore/₹ 717 crore respectively in Q3FY26. The company’s net cash surplus (including RERA cash) stood at ₹ 11,660 crore (up ₹ 3943 crore QoQ).
Investment Rationale
• FY26 pre-sales guidance retained despite weak Q3: DLF maintained its pre-sales guidance of ₹ 20000-22000 crore (9MFY26 – ₹ 16,176 crore, down 16% YoY) for FY26 . Q4FY26 pre-sales is likely to be aided by Arbour 2 senior living project (~₹ 2000 crore GDV) and resumption of Dahlias sales. For FY27, it plans one major group housing project (~2.5 msf) in DLF city (Gurugram), Goa project, new phase of Dahlias (Q1FY27), another phase of Privana (Q3FY27/Q4FY27), next phase of Westpark, and Panchkula projects. Its IREO land parcel (~8 msf with GDV of ~₹ 27000-28000 crore) is in the final leg of approvals (launch timeline undisclosed). Overall, it has a medium-term launch pipeline of ~₹ 60,215 crore.
• Eyeing ~₹ 10,000 crore rental income in the medium term: DLF’s rental assets of ~49 msf (~44msf offices, ~5msf retail) are operating at high occupancy levels of 94%/97%. Further, It has a strong pipeline of ~27 msf (~20msf offices, ~7msf retail) for the medium term (~76msf portfolio to generate rental income of ~₹ 10,000 crore) and has a balance potential of ~60msf. It estimates exit rentals of ₹ 6400 crore (DCCDL/DLF – ₹ 5900 crore/₹ 550 crore) for FY26 and ₹ 7400-7500 crore (DCCDL/DLF – ₹ 6300 crore/₹ 1150 crore) for FY27.
Rating and Target Price
We retain Buy on the stock with a revised SOTP based price target of ₹ 855 (factoring delay in launches & reducing premium to NAV)
