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DLF’s Q3FY22 net residential sales bookings of Rs20.2bn were up 33% QoQ driven by the Dec’21 launch of the One Midtown Delhi project. At the beginning of FY22E, the company had given FY22E devco sales guidance of ~Rs40bn and has
now revised its FY22E guidance to Rs60-65bn owing to the strong response to the Delhi launch (Rs15bn of cumulative sales achieved till Jan’22). We model for Rs66.4bn of FY22E devco sales and over Rs70bn each in FY23-24E. We expect DCCDL to clock rental EBITDA of Rs34.0bn in FY22E and Rs 40.5bn in FY23E. We maintain our ADD rating on DLF with an unchanged Mar’22 SoTP based targetprice of Rs434/share. Key risks to our rating are weakness in office leasing and slowdown in residential demand.

Delhi residential launch drives sales bookings: 

The company clocked net residential sales bookings of Rs20.2bn in Q3FY22 as the company booked Rs7.0bn of sales from the One Midtown, New Delhi (50% JV with GIC) launched in Dec’21. As informed earlier by the company, the One Midtown project having total saleable area of 2.1msf has seen cumulative bookings of Rs15.0bn till Jan’22 and the company plans to launch the third tower in the project in Feb’22 having total potential sale value of ~Rs11bn. At the beginning of FY22E, the company had given FY22E devco sales guidance of ~Rs40bn and has now revised its FY22 guidance to Rs60-65bn owing to the strong response to the Delhi launch. We model for Rs66.4bn of FY22E devco sales and over Rs70bn each in FY23-24E. The company has also revised overall sales value guidance by 17% to Rs470bn for its stated launch pipeline of 35msf owing to higher-than-expected realisations.

DLF’s net debt declines further, liquidity position comfortable:

DLF’s net debt(ex-DCCDL) declined QoQ by Rs7.6bn to Rs32.2bn (similar decline achieved in Q2FY22) on the back of continued strength in customer collections of Rs12.2bn for the quarter vs. usual run-rate of Rs6-8bn. We expect the company to achieve further
reduction in debt levels to Rs24bn by Mar’22.

Rental business delivers resilient performance:

DCCDL delivered a resilient Q3FY22 performance with rental collections of 100% and rental EBITDA of Rs8.7bn (increase of 6% QoQ) on account of reduced mall rental waivers and office portfolio occupancy remaining flat QoQ at 86%. While the Omicron wave has led to a slight delay in return-to-office plans, the company remains confident of a strong leasing pickup from FY23E with portfolio occupancy levels to rise to over 90% in H1FY23. We model for DCCDL rental EBITDA of Rs34.0bn in FY22E and Rs40.5bn in FY23E.

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