Dahlias super-luxury project lays strong growth foundation for DLF

DLF reported strong pre-sales of Rs 12,100 crore in Q3FY25, up 34 per cent year-on-year (Y-o-Y) (up 17x quarter-on-quarter or Q-o-Q). This was backed by sales from its super-luxury project, ‘The Dahlias,’ which recorded pre-sales of Rs 11,800 crore (98 per cent). DLF sold 173 units with a total area of 1.85 million square feet (msf) at an average realisation of Rs 70 crore per residence. By 9MFY25, the company had exceeded its full-year pre-sales guidance. It’s likely that FY25 pre-sales will end at Rs 23,800 crore (previously guided for Rs 18,100 crore).

 

The launch pipeline for FY25 has further increased by Rs 3,100 crore to Rs 44,100 crore, which is Rs 14,600 crore higher than the initial guidance of Rs 29,500 crore announced in Q3FY24. The pipeline beyond FY25 stands at Rs 70,400 crore vs Rs 63,500 crore in Q2FY25.

 

Collections improved 23 per cent Y-o-Y and 31 per cent Q-o-Q to Rs 3,100 crore. The operating cash flow (OCF) has jumped 67 per cent Y-o-Y (53 per cent Q-o-Q) to Rs 1,900 crore. The net cash position stood at Rs 4,500 crore (Rs 2,800 crore at end- Q2FY25).

 

The Q3FY25 revenue was at Rs 1,530 crore, flat Y-o-Y (down 23 per cent Q-o-Q). The earnings before interest, tax, depreciation, amortisation (Ebitda) dipped 22 per cent Y-o-Y (20 per cent Q-o-Q) to Rs 400 crore (13 per cent above estimate), while margin was at 26 per cent (flat Q-o-Q). The profit after tax (PAT) stood at Rs 1,630 crore, up 149 per cent Y-o-Y (up 18 per cent Q-o-Q) due to the reversal of deferred tax liabilities. Adjusted for the deferred tax liability (DTL), the PAT (excl. DTL) was Rs 1,060 crore, up 61 per cent Y-o-Y (up 37 per cent Q-o-Q). In Q4FY25, DLF is estimated to report a net loss of Rs 1,000 crore due to the impact of DTL reversal and one-off tax indemnity in Q2FY25 and Q3FY25. Excluding the tax related impacts, PAT in Q4FY25 should be positive. 

 

In 9MFY25, revenue was Rs 4,870 crore, up 13 per cent Y-o-Y. Ebitda decreased 17 per cent Y-o-Y to Rs 1,130 crore, with a margin of 23 per cent (down 9 per cent Y-o-Y). The PAT was Rs 3,660 crore, up 103 per cent Y-o-Y (including reversal of DTL). Adj. PAT (excl. DTL) was Rs 2,480 crore, up 37 per cent Y-o-Y. The Gross net asset value (NAV) comes out to Rs 243,900 crore, which, after subtracting net debt of Rs 7,800 crore (incl. DCCDL debt), comes out to a net of Rs 236,100 crore. DLF Cyber City Developers Limited, or DCCDL, is the flagship of DLF Group engaged in the business of development of commercial properties, which are rented out.

 

In DCCDL, the Debt to Gross Asset Value declined 1 per cent to 22 per cent (down 11 per cent from FY21). The rental income in DCCDL’s commercial portfolio grew 9-10 per cent Y-o-Y for office and retail. Total revenue stood at Rs 1,610 crore, up 9 per cent  Y-o-Y. Ebitda stood at Rs 1,240 crore, up 10 per cent Y-o-Y. Occupancy across non-SEZ and SEZ portfolios rose 1 per cent each to 98 per cent and 87 per cent, respectively. Around 14 msf is under construction in Gurugram and Chennai.

 

DLF continues to steadily monetise its vast land bank with launches. Projects in Goa, Mumbai and the Privana phase 3 are in different stages of approval. DLF is confident of launching its Mumbai project (about 0.9 msf of area) in Q4FY25. Privana phase-3 and Goa would be launched in FY26.

 

‘The Dahlias’ is a luxury benchmark. Total revenue potential of the project is Rs 35,000 crore (35 per cent higher than RERA filing), of which inventory worth Rs 23,000 crore (about 247 units) is unsold. Construction cost is 30 per cent of sales.

 

Projects worth Rs 70,400 crore are planned beyond FY25. For the Mumbai project, total potential saleable area can go beyond 5 msf. Goa will be a super-luxury project. The Mumbai project will be launched in Q4FY25, followed by Goa and Privana phase 3 in FY26. The cash escrowed with RERA account of Rs 7,100 crore will reduce.

 

The valuation of a real estate developer is more accurately done by looking at the asset value rather than quarterly results. Given the strong pre-sales, most analysts are upgrading DLF.