DLF remains a leader in realty space, but losing its heft to younger peers

DLF, once the country’s largest real estate developer by a long mile, is gradually losing its heft to younger developers. With a market capitalisation of around Rs 38,000 crore, DLF remains the industry leader but the company has underperformed its peers for the better part of last decade.
 

DLF stock price has halved in the past ten years from around Rs 300 in June 2010 to Rs 156 now. In the same period, Godrej Properties’ stock price has increased 138 per cent, Oberoi Realty is up 35 per cent, and Prestige Estates is down 15 per cent. In comparison, the benchmark BSE Sensex doubled during the period while BSE Realty Index is down 48 per cent since June 2010.

However, DLF continues to dominate the industry with its market capitalisation equivalent to the combined market capitalisation of next three developers — Godrej Properties, Oberoi Realty, and Prestige Estates.

 

DLF’s difficulty to grow in past decade shows in its profit and loss account. In the past five years, DLF’s net sales shrunk at an annualised rate of 4.5 per cent from Rs 7,648 crore in FY15 to Rs 6,083 crore last financial year. The company reported a net loss of Rs 583 crore last financial year, against a net profit of Rs 540 crore in FY15. In the same period, Godrej Properties’ net sales is up nearly 40 per cent growing at compound annual growth rate (CAGR) of 6 per cent while its net profit grew at a CAGR of seven per cent during the period.

 

In comparison, Indiabulls Real Estate’s net sales grew at a CAGR of 4.4 per cent while its net profit halved during the period. Prestige Estates and Oberoi Realty are yet to declare their results for FY20.
 

Analysts, however, say DLF may continue to lead the industry given its dominance of the Gurugram market, which remains one of the biggest residential and office markets in the country. This provides company with a steady cash flows and great staying power unlike many of its peers.