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DLF reported Revenue/EBITDA/APAT at Rs 15.4/5.0/4.5 bn, (8)/(9)/8% beat/(miss) on our estimates. Presales rebounded to Rs 10.2bn vs Rs 8.5bn QoQ. While office collection remains robust with +98% collections, occupancy declined to 94% from 97% on Sep 20-end. Retail is inching towards recovery with footfall at 60% and spending 70% of pre-pandemic level. Gradual recovery in presales, strong launch pipeline and REIT plans for DCCDL augur well for the company. We maintain BUY on DLF, with unchanged target price of Rs 320, given healthy balance sheet and change our FY21/FY22/FY23 EPS estimates by 4.2/0.5/0.6% to account for lower cost of debt.

* 3QFY21 highlights: DLF registered consolidated revenue at Rs 16.1bn, - 15%/-4% YoY/QoQ and 8% behind our estimate. Revenue recognition from Camellias stood at Rs 9bn during the quarter (vs Rs 7bn in 2QFY21). EBIDTA margins improved to 32.3% (17.0/28.8% 3QFY20/2QFY21), on revenue recognition from Camellias and reduction in cash overhead expenses. Finance costs continued downward trajectory, as it declined by 16.5%/12.3% YoY/QoQ, leading to APAT (Rs 4.5bn) beat of 8% on estimate.

* Presales recovering; launch visibility across categories: DLF reported sales booking at Rs 10.2bn, rise of 40/20% YoY/QoQ. Camellias, newly launched independent floors, plotted developments and National Devco contributed Rs 2.9bn, Rs 3.6bn, Rs 0.9bn and Rs 2.7bn respectively. The company plans to launch ~14msf over FY21-FY23 in commercial and residential space. With completed inventory of Rs 60bn and strategy of launching projects at initial stage of development, management expects to clock Rs 10bn sales/qtr, which we believe is not a tall task for DLF.

* Balance sheet position comfortable: Consolidated net debt remained stable at Rs 51bn at the end of quarter (vs Rs 52bn on Sep-20 end), with net D/E at 0.15x. Net debt is likely to remain at the same level given the planned residential launches will largely self-finance. The company also brought down interest cost from 9.1% in 2QFY21 to 8.9% during the quarter and is targeting further reduction of 30-40bps. DLF generated positive operating cashflow of Rs 1.8bn during 3QFY21.

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