DLF
A lot riding on Mumbai
Over the years, DLF has created a new benchmark and addresses in the NCR luxury real estate market, with differentiated offerings like Camellias, Arbour, and Privana. Whilst it had the advantage of owning large superbly-located land parcels, it was able to realize high value by building new infrastructure and connectivity to these land parcels and delivering top quality homes to its customers. This helped drive a manifold increase in development value and margins. DLF’s products sell at a significant premium to the NCR micro-market and its long-term investments are now bearing fruit. Be it a golf course, a private metro, low-density development, DLF is now realizing significant premiums for all of this. This DLF playbook is getting ready to be replicated in Mumbai, with its maiden launch—DLF West Park. Contrary to the expectation, it has kept the pricing competitive at INR 42,500/sqft + taxes, with 1.2mn sqft carpet area and INR 60bn+ GDV. DLF’s share in the project is 51%. We expect the launch to do well and pave the way for further expansion into the MMR market. On an annual basis, we expect it to achieve INR 25-30bn/year presales in the initial 2-3 years from MMR and this annual run-rate shall double to 2x over the next five years. DLF’s overall presales momentum is expected to remain steady at INR 200bn+ (expect 10-15% growth in FY26), driving ~2x growth in both PAT and cash flows by FY30. With significant embedded potential from its existing land bank, DLF continues to generate healthy margins, targeting 45%+ gross margins in the medium term. We maintain BUY on DLF with a TP of INR 988/share.
▪ West Park ticks all the boxes including pricing, amenities, and value: DLF Andheri West Park is a total development on 5.2acres of land and a part of a 10- acre master plan. Phase 1 will house four towers rising to 37 storeys and 416 residences. The overall project will have eight towers, with a carpet area of 1.2mn sqft and over 800+ apartments (160 apartment/acre). Phase 2 may get launched by FY26-end or early-FY27, basis the response received by Phase 1. Apartment carpet area would range from 1,126-1,511 sqft, with pricing of INR 37,270-47,875/sqft on agreement value, excluding statutory taxes. Basis the carpet area and pricing, we expect ticket price to be INR 42-72mn + taxes. The price could increase INR 3,000+/sqft + taxes within 10 days of launch. The payment plan design will be (1) construction-linked and (2) down payment. Clubhouse and open areas are the main highlight, covering (1) social, (2) active lifestyle, (3) recreational, (4) relaxation, (5) wellness, (6) kid-centric, and (7) easily accessible aspects. This will all be a part of the 1.5acres of Eco-Deck.
▪ MMR to emerge as a new growth driver as well as help address diversification beyond NCR: DLF residential, office, and retail assets are significantly located in the NCR market. The price point and premiumization strategy of DLF present unique challenges to expand beyond the select markets. NCR has been dominating residential presales with Privana, Camellias, and Dahlia as key contributors for the past two years. With the base heavy, FY25 presales of INR 212bn were largely contributed by Dahlias (INR 137bn) and Privana (INR 56bn). However, DLF needs diversification beyond these 2-3 hero products. Whilst NCR can continue to give new projects, presales growth will now be contingent on expansion into new markets. DLF had been long experimenting with the idea of entering the MMR market albeit, in the past, it has had to exit Lower Parel and more recently the Tulsiwadi project as well. The West Park launch is a re-entry into Mumbai and may prove to be the much-needed growth catalyst in times to come. The MMR luxury market is steady and West Park’s positioning is more like Privana’s. With this project, DLF intends to premiumize and move towards Crest and Camellias in MMR. Capital is not a constraint while new business development in MMR will be closely monitored.
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