DLF gains for seventh straight day, rallies 37% from 52-week low in October

Shares of DLF were trading higher for the seventh straight day on Tuesday, up 8 per cent to Rs 183 on the BSE on the back of heavy volumes.

Since October 10, in the past seven trading days, the stock of real estate developer company has soared 29 per cent, as compared to a 4 per cent rise in the S&P BSE Sensex. It has surged 37 per cent from its 52-week low level of Rs 134, touched on October 1 in the intra-day trade on the BSE.

Realty major DLF on October 2 said it had settled the entire Rs 8,700 crore amounts payable to DLF Cyber City Developers Ltd (DCCDL), its joint venture with Singapore-based GIC, by transferring various completed commercial properties and land parcels as well as cash payment. With settlement of this dues, the company said it has completed the exercise of transforming its balance sheet and consolidation of all rental assets under the DCCDL.

According to a PTI report dated October 2, DLF had sold 376 ready-to-move-in luxury flats worth Rs 700 crore on the first day of the launch of its new housing project in Gurugram, even as the overall property market is facing a demand slowdown. The company has launched the second phase of its luxury residential project Ultima.

Analysts at JP Morgan believe the sell-out response to DLF’s Ultima project (around 70 per cent sold at launch post completion) raises the possibility that the company could end up beating pre-sales guidance for FY21 (Rs 2,700 crore) after delivering a beat in FY20.

“This should then be accretive for cash flows from Q4 onwards given there seem to be no subvention associated with the product. The launch’s success comes in a weak New Gurgaon micro market and at a around 20-25 per cent premium to surrounding prices, implying that customers are paying a premium for lower risk / developer brand apart from product quality. This is DLF’s second successful launch post Crest in FY19 and seems to be a vindication of its strategy of selling post completion,” it added.

The brokerage firm has ‘overweight’ rating on DLF with 12-month target price of Rs 280 per share. Analysts believe DLF’s residential business is attractive as the business will likely reach zero debt by FY21. We think inventory monetization (esp Phase 5 sales) may happen at a pace faster than assumed by the market. Furthermore, the RentCo should, in our view, sustainably grow at mid-teens levels from hereon with the platform formed with GIC, it added.

At 12:52 pm, DLF was up 6 per cent at Rs 179 on the BSE, as compared to a 0.14 per cent decline in the S&P BSE Sensex. The trading volumes on the counter rose 1.4 times with a combined 15.2 million equity shares changing hands on the NSE and BSE so far.