Neutral DLF Ltd For Target Rs. 440 - Motilal Oswal Financial Services Ltd
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* DLFU reported record bookings of INR85b in 4QFY23, up three-fold YoY and about in line with our estimate of INR89b. The company had a successful launch at Sector 63, Gurugram (Arbour) with bookings of INR80b, but also reported cancellations worth INR1b at The Camellias, Gurugram.
* The company reported bookings of INR150b in FY23, doubling YoY, driven by major launches in Gurugram and Chandigarh Tri-city, which accounted for 80% of the overall sales. Overall company launched ~10msf of projects in FY23.
* DLFU plans to launch 11msf of projects in FY24 with a sales potential of INR197b. Along with INR73b of existing inventory, company will have INR270b of inventory to monetize in FY24. In FY23, DLFU clocked an inventory churn ratio of ~68% with a total inventory of ~INR221b and bookings of INR150b.
* We expect the inventory churn to be at least 50-55% in FY24, higher than the company's assumption of 40-45%, which would ensure pre-sales runrate will sustain at INR150b. In a bull case scenario, if the company manages to maintain a similar inventory churn as FY23, it could achieve a 20% growth.
Strong cash flow performance leads to negligible debt in Devco
* Collections grew 50% YoY /38% QoQ to INR19b, driven by an initial 10% booking amount collected for INR80b sales at The Arbour, Gurugram. OCF (post interest and tax) doubled YoY to INR10b.
* The company’s surplus of 14b, which included INR4b of dividend from DCCDL, resulted in a decrease in net debt to INR7b. The company will continue to spend its surplus cash flows on growth and shareholder return through dividends.
* Revenue declined 6% YoY to INR15b (13% below estimate). EBITDA came in at INR4.0b (in line), up 8% YoY as margins increased 350bp to 27%. PAT grew 40% YoY to INR5.7b, driven by a 57% increase in the share of JV’s profit. However, the PAT was 18% lower than our estimate.
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