Buy DLF Ltd For Target Rs. 1,000 By JM Financial Services
Annuity business to drive growth going ahead
DLF Limited (DLF) reported 4QFY25 bookings of INR 20.3bn (+39% YoY; -83% QoQ), which was 70% above JMFe of INR 12bn. In FY25, pre-sales came in at 212bn, up 43% YoY with Dahlias contributing 65% of total bookings. DLF has surprised the street by monetizing c. 40% of the inventory value in the project across 2 quarters (ultra-luxury projects are typically slow-moving due to higher ticket sizes). Management re-iterated that the demand for an aptly priced Grade-A product continues to remain healthy. It intends to launch INR 172bn worth of projects in FY26E and is confident of maintaining the bookings run-rate of INR 200- 220bn. Collections (including rentals) were strong at 32.7bn (+51% YoY; +7% QoQ), which led to healthy operating cash flows of INR 24bn, strengthening the net cash position at the DevCo to INR 68bn. In FY25, the DCCDL portfolio reported rental income of INR 47.5bn, up 10% YoY and is poised to grow at 11% CAGR over FY26E-28E aided by commissioning of new assets. DLF with its steady annuity cash flows and fully paid-up land banks remains extremely well placed to scale up across segments and newer geographies. DLF remains our preferred pick in the real estate space. We maintain a BUY rating with a SoTP based TP of INR 1,000 (implying 33% upside from CMP)
* Record pre-sales led by new launch: DLF reported bookings of INR 20.3bn (+39% YoY; - 83% QoQ) - 70% above JMFe (INR 12bn). In FY25, DLF generated pre-sales of INR 212bn, up 43% YoY and 6% higher than the guidance of INR 200bn. Sales were driven by the overwhelming response to the company's most luxurious project, The Dahlias. DLF recorded total bookings of INR 137bn from this project, (INR 118bn and INR 19bn in 3Q/4Q respectively) with pricing of over INR 100k/sqft on carpet area. Despite the high ticket size product, the company has monetised over c.40% of the inventory within 2 quarters of launch. The launch pipeline beyond FY25 has now increased to INR 739bn (v/s INR 704bn in 3Q) including INR 172bn worth of projects planned for launch in FY26E.
* Strong cash flow performance: In 4QFY25, the performance on the cash flow front was also encouraging with collections at INR 32.7bn (+51% YoY; +7% QoQ) and OCF post interest and taxes stood at INR 24bn (+135% YoY; +36% QoQ), implying a OCF margin of 72%. For the full year, collections/OCF came in at INR 117.7bn/74bn, up 36%/69% respectively. Consequently, the net cash position increased by INR 23bn sequentially to INR 68bn.
* DCCDL - poised for healthy growth: In 4QFY25, DCCDL office rentals came in at INR 10bn (+11% YoY; +4 QoQ) and retail rentals were flat YoY at INR 2.2bn (-4% QoQ). Total rental income for FY25 was up 10% YoY to INR 47.5bn. EBITDA (incl other income) for the quarter and full year stood at INR 12.5bn/ INR49.5bn, up 8%/10% YoY respectively. The non-SEZ portfolio is almost fully leased with occupancy of 98%, while the SEZ assets achieved a occupancy of 88% - taking the full year occupancy to 94% (up 100bps YoY). Aided by ramp-up of Downtown Gurugram (Block 4) along with completion of Tower 3, Chennai and Mall of India, Gurugram (total 3.7msf), we expect the DCCDL portfolio to deliver 11% CAGR in rental over FY26E-28E to INR 65bn (ex CAM). Net Debt for DCCDL increased QoQ to INR 175bn (INR 167bn in 3QFY25) and net debt to GAV stands at 21%.
* Reported financials: In 4QFY25, revenue recognised stood at INR 31.3bn (+47% YoY; +2x QoQ) while EBITDA stood at INR 9.8bn (+30% YoY; +135% QoQ) with a margin of 31.3%, down 400bps YoY. In FY25, Revenue/EBITDA came in at INR 79.9bn/21bn, up 24%/flat YoY. Aided by income from JV of INR 16.7bn, PAT for the year increased 71% to INR 46.7bn.
* Maintain ‘BUY’ with a TP of INR 1,000: DLF with its steady annuity cash flows and fully paid-up land banks remains extremely well placed to scale up across segments and newer geographies. We maintain a BUY rating with a Mar’26 TP of INR 1,000 4QFY25 earnings con-call highlights: - Housing demand for quality projects continue to be on the rise. Gurugram today has also become a good investment option for people preferring rental income given the healthy increase in migration into the city. - Unlike other players, who have to continuously look for land opportunities, DLF has a sizable land bank, which can support the growth in near term. - As discussed during the analyst day, the pre-sales target remains around INR 200- 220bn. Company has outperformed consistently and the trend can surely continue. - The 3rd phase of Privana and the Mumbai (Andheri) project are expected to be launched in 1QFY26 and the company will open additional inventory at Dahlias post the completion of experience center (by Nov’25). - Pricing at Dahlias is ~INR 100k/sqft on carpet and for Camelias, prices in the secondary market are ~INR 200k/sqft. The management expects this gap to converge eventually at a healthy pace, across the construction timeline. - The previous phases of DLF Privana are trading at a premium of INR 2,500 – 4000 psf and the demand for upcoming new phase remains healthy - Company will spend INR 50bn annually on capex in FY26E/27E. The exit rentals for FY26E will be INR 67bn and it will increase sharply in FY27E due to full year contribution of new assets
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