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DLF has continuously improved its presales from recent low of Rs11.6bn (FY17) and ended FY21 with presales of Rs30.8bn. We believe DLF with under‐construction projects, current pipeline of 35msf and inventory (faster monetization of inventory in Camelias) to cross presales of Rs40bn comfortably. We valued residential business at Rs.123.7bn.

Due to pandemic across country commercial real estate has witnessed slowdown in new leasing but we are confident it will get back to its pace as covid situation recovers fully. We believe with 39.1msf portfolio, DCCDL is on track to achieve NOI of Rs52bn by FY25 and valued DCCDL at Rs388bn (net of DLF share of debt). Most importantly DLF has shown capability of monetizing its land bank faster and very efficiently in last few years.

We believe DLF will continue to monetize its land bank of 152msf in coming years which we valued at Rs119/share. DLF continuously maintaining its D/E below 0.2x from FY20 and we expect it to remain at same levels which allows DLF to tap the opportunity whenever required. Recovery in residential segment and expected pick up in the leasing activity along with DLF’s long standing track record gives us confidence. We initiate coverage on DLF with BUY rating with TP of Rs340/share (WACC 10.3%, Office Cap Rate 8%, Retail Cap rate 6.25%).

Result Highlights:

* For Q4FY21, DLF’s sales stood at Rs17.13bn, reporting a growth of 11%q/q & 1%y/y. EBITDA stood at Rs4.54bn, an increase of 43.3% y/y & ‐9% q/q. EBITDA margins came in at 26.5% Vs 18.7%/32.3% in Q4FY20/Q3FY21 respectively. Profit for quarter stood at Rs4.8bn (6.6% q/q)

* FY21 revenues stood at Rs54.1bn, decline of 11% y/y. Operational profit came in at Rs14.2bn as compared to Rs11.4 Bn in FY20. Margins came in at 26.2% in FY21 Vs 18.7% in FY20. Company’s FY21 profit stood at Rs11.9bn as compared to loss of Rs9.2bn in FY20.  

* During Q4FY21, DLF issued possession letter for 514 units (1.29msf) & booked net pre‐sales of Rs10.6bn (Vs Rs3.25bn in Q4FY20). For FY21 company recorded new sales bookings of Rs30.84bn (up by 24% y/y). New product pipeline stood at 35msf.

* Company’s net debt for Q4FY21 stood at Rs48.9bn, declining from Rs51bn in Q3FY21 & a total reduction of Rs3.82bn during the fiscal. Finance cost has reduced from 9.8% in Q4FY20 to 8.4% in Q4FY21.  

* In Q4FY21, DCCDL rental income from office came in at Rs7.13bn (up by 11% y/y) & retail rentals stood at Rs1.25bn (up by 4% y/y). Total revenue for quarter was Rs12.94bn (growth of 4% y/y & 15% q/q). EBITDA stood at Rs9.9bn, an increase of 12% y/y & 11% q/q. For FY21 DCCDL’s Revenue/EBIDTA/PAT declined by 14%/8%/31% y/y to Rs 43.85bn/34.17bn/9.13bn respectively. 

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