Strong momentum, new launches to drive gains for realty major DLF

Powered by strong bookings of its ultra-luxury project DLF Privana North in Gurugram, the largest listed real estate company of India posted a strong pre-sales growth in the first quarter of 2025-26 (Q1FY26). DLF’s pre-sales grew by 78 per cent year-on-year (Y-o-Y) and by 500 per cent on a sequential basis to ₹11,430 crore. Privana North accounted for 96 per cent of the pre-sales, with the rest coming from its Dahlias project. 

Given the strong start to the year and expectations of healthy sales going ahead, brokerages are positive on the outlook for FY26. However, some analysts believe that the upsides are already factored into the stock, which has gained 13 per cent over the last three months. 

The new launch in the 116-acre DLF Privana township led to sales of 1,164 units with pricing of ₹23,000 per square feet (sq ft) and average unit value of ₹9.5 crore. The company has guided for ₹17,200 crore of launches in FY26, and it has thus far achieved 64 per cent of the launch pipeline in Q1FY26. With Q1 sales at ₹11,430 crore, the company is expected to beat its pre-sales guidance of ₹21,000 crore-22,000 crore for FY26. In addition to the Privana Phase 3, Gurugram, other launches include its Andheri project in Mumbai and villa project in Goa as well as new inventory in Dahlias super-luxury project. The company has a medium-term launch pipeline of ₹63,000 crore. 

On the rental portfolio of 46 million square feet (msf), occupancy levels stood at 94 per cent by volume and 96 per cent by value in Q1FY26. The company achieved an operating profit of ₹1,350 crore, which was up 14 per cent Y-o-Y and 8 per cent on sequential basis. The annuity portfolio is expected to yield rentals of ₹6,700 crore by the end of FY26. 

 

Ambit Research points out that the company’s annuity portfolio generates sustainable cash flows (₹5,700 crore FY26 operating profit) and offers a warranted portfolio hedge even as there is residential oversupply in the Gurugram market. While its target price is set at ₹930, continued sales momentum for ultra-luxury Dahlias and upcoming launches from land bank will drive rerating, believe Karan Khanna and Samarth Agrawal of the brokerage.

 

Additional assets in the annuity pipeline are at 28 msf, with about 5 msf expected to be completed in FY26. The company expects a mid-teen rental growth with like-for-like growth of 7-8 per cent while the rest is accounted for by asset additions. The rental business has a debt of ₹17,000 crore, with a net debt-to-operating profit at 3.2 times.

 

JM Financial Research has a “Buy” rating with a sum-of-the-parts valuation of ₹1,000. Analysts led by Sumit Kumar of the brokerage say, “Aided by the rampup in new assets and a strong development pipeline, we expect rental income to grow at 11 per cent annually over FY25-FY28. 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.”

 

While Nomura Research is bullish about DLF’s prospects, it has maintained its “Neutral” rating on the stock. Though DLF generates robust margins/strong cash, Akash Gupta of the brokerage believes that the company’s long-term growth potential is already priced into its valuation. The current valuation is at a 20 per cent premium to net asset value and prices in an 8 per cent pre-sales annual growth over the next 13 years, which is adequate, he adds.