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Gurugram launch to spur Q4FY23/FY24E sales bookings

DLF has launched its Sector 63, Gurugram project christened “The Arbour” in Feb’23 across 4.4msf having a total potential sale value of Rs80-90bn (company guidance was for 3.1msf of launches in Q4FY23). Our channel checks indicate significant buyer interest from customers for the project. Depending on customer interest for specific inventory, the company may look to sell the entire inventory on launch or hold back inventory with an intent to achieve higher pricing. The company has already clocked 9MFY23 sales bookings worth Rs66.0bn, and assuming Rs30bn of sales bookings from Sector 63 project in Q4FY23 and balance Rs50-60bn in FY24E, we raise our FY23E and FY24E residential sales estimates by 17% each to Rs103.0bn and Rs106.8bn, respectively. We retain our BUY rating with a revised SoTP based target price of Rs458/share (earlier Rs450) based on 1x Mar23E NAV owing to higher-than-expected sales bookings from Sector 63, Gurugram launch, and retain our FY23-25E rental income estimates for DCCDL. Key risks are weakness in office leasing and residential demand.

* Potential sales booking value of Rs80-90bn from new launch in Gurugram: DLF has done an initial launch in Feb’23 of its Sector 63, Gurugram project christened “DLF The Arbour” which consists of over 1,100 units across 4BHKs in five towers of ~4,000sft saleable area/unit onwards which implies a total launched saleable area of 4.4msf. As per our channel checks, the per unit pricing works out to between Rs70-90mn with strong initial interest from customers for the entire project which implies a potential total sale value of Rs80-90bn. The launched area is higher than the guidance of 3.1msf for Q4FY23 given by the company. Depending on customer interest for specific inventory in the project, the company may look to sell the entire inventory on launch or hold back inventory with an intent to achieve higher pricing at a later stage.

* Sector 63, Gurugram launch to boost Q4FY23/FY24E sales bookings: With the company having already clocked 9MFY23 sales bookings worth Rs66.0bn and the Sector 63, Gurugram and Sector 93 independent floors (sale value of ~6bn) being launched in Q4FY23, we raise our FY23E and FY24E residential sales estimates by 17% each to Rs103.0bn and Rs106.8bn, respectively as we assume Rs30bn of sales bookings from Sector 63 project in Q4FY23 and balance Rs50-60bn from the same project in FY24E. Depending on company’s strategy to sell off or hold inventory in this project, actual sales bookings may differ from our estimates.

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