DLF surges 6% on strong Q2 results, inclusion in MSCI index

Shares of DLF surged 6 per cent to Rs 204 on the BSE on Friday after the company reported a strong set of numbers for the quarter ended September 2019 (Q2FY20). Additionally, stock of the real estate developer was also included in the MSCI Global Standard Index with effect from November 26, 2019.

DLF was trading close to its 52-week high level of Rs 209 touched on April 3, 2019 in the intra-day trade. The counter has seen huge trading volumes with a combined 10.2 million shares changing hands on the NSE and BSE till 09:36 am. The benchmark S&P BSE Sensex, however, was down 0.29 per cent at 40,535 points.

In Q2FY20, DLF reported 18 per cent year on year (YoY) jump in its consolidated net profit at Rs 444 crore on the back of higher revenue. Consolidated revenues increased 26 per cent at Rs 1,940 crore over previous quarter. EBITDA (earnings before interest, tax, depreciation and amortisation) margins, too, rose at a healthy 30 per cent for the development business, DLF said.

"The development business has been performing well, and achieved net sales of Rs 725 crore in Q2, We expect this momentum to sustain," the management said, adding, "Pursuant to the settlement of inter-company payables, the net debt for the company stood at Rs 4,461 crore at the end of the quarter. We are committed to reducing it in the near term".

Analysts at JP Morgan have ‘overweight’ rating on DLF with March 21 target price of Rs 280 per share. The foreign brokerage firm believes 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. Further Rentco should, in our view, sustainably grow at mid-teen levels from hereon with platform formed with GIC,” JP Morgan said in company update.  

In another development, Morgan Stanley Capital International (MSCI) last night announced big semi-annual rebalancing in its global standard index, as per reports. DLF was among the eight stocks that were included in the MSCI's India Domestic Index. Others to be included were Berger Paints, Colgate, HDFC AMC, ICICI Prudential Life, SBI Life, and Siemens.