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Growth story on track, Mumbai foray a key monitorable

Along expected lines, DLF clocked Q1FY24 sales bookings of INR20.4bn (flat YoY) driven by sales at its Camellias, Gurugram and One Midtown, Delhi project. The company has retained its FY24E sales booking guidance of at least INR120-130bn which largely hinges on 3.5msf of Crest 2 luxury project launch in H2FY24 having estimated sales value of over INR100bn. The company has also announced its re-entry into the Mumbai market through a JV with a local Mumbai developer in Andheri West wherein it will develop a 3-3.5msf residential project in phases (0.9msf in Phase 1) for an equity investment of Rs4bn for a 51% stake. While we retain our FY24/25E devco sales bookings and DCCDL rental income estimates, we roll forward to Mar’24E NAV and arrive at a revised SoTP based target price of INR532/share (earlier Rs473) and retain our ADD rating. Key risks are weakness in office leasing and residential demand.

Camellias and One Midtown projects drive sales bookings

The company clocked Q1FY24 residential sales bookings of INR20.4bn (flat YoY, I-sec estimate of INR20.0bn) driven by sales at Camellias, Gurugram (INR5.6bn), One Midtown, Delhi (INR6.6bn), Gurugram independent floors (INR4.9bn) and Panchkula floors (INR1.3bn). DLF’s net (ex-DCCDL) also declined by INR6.6bn QoQ to just INR0.6bn driven by operating surplus of INR7.3bn for the quarter.

Enhanced launch pipeline to drive FY24-25E sales bookings

Given the strong sales velocity in FY23 with sales bookings of INR151bn, the company had added 6msf of new projects to its earlier launch pipeline of 35msf for FY22 and beyond (41msf cumulatively) and has retained its guidance for at least INR120-130bn of sales bookings in FY24E. Overall, the company has planned 11.4msf of launches in FY24E having sales potential of INR197bn. The FY24E guidance is contingent on the inventory released for sale in its planned 3.5msf luxury launch in Phase V, Gurugram (Crest 2) which is estimated to have over INR100bn of sales value. We retain our FY24E and FY25E devco sales booking estimates of INR120bn and INR129bn, respectively.

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