Buy DLF Ltd for the Target Rs.1,005 by Motilal Oswal Financial Services Ltd
Privana launch lifts sales; but collections disappoint
Robust medium-term pipeline
* In 1QFY26, bookings surged 78% YoY/5x QoQ to INR114b (11% below our est.), fueled by healthy sales from the luxury project, DLF Privana North, launched during the quarter. Privana North contributed INR110b or ~96% of total presales, while the remaining 4% came from Dahlias.
* Collections declined 6% YoY/16% QoQ to INR28b (45% below est.). As a result, OCF fell 14% YoY/37% QoQ to INR16b. Net cash stood at INR80b vs. INR68b in 4QFY25.
* After the DLF Privana North launch, the medium-term launch pipeline stands at INR629b. DLF has guided for INR172b+ in launches in FY26, of which it has already achieved 64% in 1QFY26.
* P&L performance: In 1QFY26, revenue came in at INR27.2b, up 2x YoY and down 13% QoQ (62% above estimate).
* EBITDA was up 59% YoY/down 63% QoQ at INR3.6b. EBITDA was 41% below our estimate because the gross margin was hit by 30%. This was due to the recognition of One Midtown (a JV with GIC), which is a low-margin product. Employee and other expenses were largely stable vs. our expectations. EBITDA margin stood at 13.4% (down 3.4pp YoY).
* However, this gap was reduced in PAT as a higher contribution of other income led to PAT of INR7.6b, up 18% YoY (18% below estimate).
DCCDL: Healthy growth; debt-to-GAV dips 1% to 20% (down 13% from FY21)
* Total occupancy in DCCDL’s office portfolio was stable at 94% (98% nonSEZ/ 87% SEZ / 98% Retail).
* Rental income grew 15% YoY to INR13.3b, led by steady growth across the portfolio.
* Net debt declined to INR173b from INR175b in 4QFY25, with a net debt-toGAV ratio of 0.20x. The cost of debt fell to 7.67% from 8.06% in 4QFY25.
Key management commentary
* Housing demand in Gurgaon remains strong, aided by the rising preference for quality homes across ownership and rental segments.
* Gross margins were impacted by revenue recognition from One Midtown, a JV project with GIC.
* Collections remained muted due to construction delays, though they are expected to gain momentum shortly.
* Key upcoming launches include Goa (FY26), Mumbai Phase 2 (1.2msft, FY27), Dahlias (Mar/Apr 2027), and DLF City (FY27).
* Privana North was launched in 1QFY26 with 39% embedded margins, followed by a Mumbai project (~0.9msft) in 2QFY26.
* Projects worth INR629b are planned in the medium term, with FY26 presales guidance at INR200-220b (~50% achieved in 1QFY26).
* Cash escrowed under RERA stands at ~INR78b and is expected to reduce as high-rise projects progress; ~INR25b remains available for dividend payouts.
* The company remains focused on NCR, Tri-City, MMR, and Goa, with limited near-term acquisition scope but openness to future opportunities.
* Capex is guided at INR50b annually for FY26 and FY27 to support ongoing and upcoming residential projects.
* The effective tax rate is expected to remain steady over the next few years, based on current business visibility.
Valuation and view: Growth trajectory remains intact
* DLF continues to enhance its growth visibility as it replenishes its launches with its existing vast land reserves. However, our assumption of a 12-13-year monetization timeline for its remaining 150msf of land bank (including TOD potential) adequately incorporates this growth.
* DLF’s business (Devco/DLF commercial) is valued at INR1,726b, wherein land contributes INR1,304b. DCCDL is valued at INR708b. GAV is at INR2,434b. After taking FY26E net cash of INR54b (incl. DCCDL) into consideration, NAV stands at INR2,488b. We reiterate our BUY rating with a revised TP of INR1,005 (vs. INR967 earlier).
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