DLF extends gains as Morgan Stanley stays bullish with a ‘buy’ rating

Shares of DLF rose marginally on January 5, extending gains from the previous session as Morgan Stanley stayed bullish on the stock following the company’s business update. The international brokerage assigned an ‘overweight’ rating to DLF with a target price of Rs 770 per share.

Analysts believe that its FY24 pre-sales would jump 30 percent on-year beyond Rs 20,000 crore, compared to Rs 13,000-crore guidance.

DLF managed to sell all 1,100 Units of Arbour 2/Privana South in December 2023, fetching more than Rs 8,000 crore. The real estate developer is planning to launch another phase this month. Analysts remain positive about the company’s outlook.

At 9:27am, DLF shares traded in green at Rs 761.45 on the NSE. In the previous session, the shares gained over 6 percent.

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Aakash Ohri, Joint MD and chief business officer of DLF Home Developers recently told Moneycontrol that the share of NRI investments in the total sales of DLF is likely to rise to around 20 percent in FY24. On October 31, 2023, DLF had said that it was aiming for sale bookings of Rs 13,000 crore during FY24 on the back of strong demand.

The company said it was confident of achieving the target and added that it would launch several new projects by March 2024.

For the quarter ended September 2023 (Q2 FY24), DLF had reported a consolidated net profit of Rs 629 crore, up 29 percent on-year. Its total income from operations rose marginally to Rs 1,476 crore, from Rs 1,360 crore a year ago and sale bookings touched Rs 2,228 crore in the quarter, with gross margins at 57 percent.

DLF said that it had turned net cash-positive during the September quarter. Its EBITDA stood at Rs 591 crore, while the surplus cash generation from operations totalled Rs 1,147 crore.

DLF is among Sharekhan’s top picks for 2025. The brokerage expects the realty firm to report healthy sales bookings, led by a strong launch pipeline for the next two years. The sales are expected to sustain, given healthy demand momentum with a possible peaking out of interest rates.

Its rental portfolio sees higher physical occupancies, and it is also aiming to doubling its retail portfolio over the next 4-5 years.

“Robust absorption of ultra-luxury residential projects and limited inventory has led to sharp price uptick in prices which is expected to benefit DLF which has more than 50 percent exposure in its available inventory (Rs 4,244 crore) and planned projects (Rs 19,710 crore),” Sharekhan said.

Besides, DLF is expected to benefit from strong residential demand in its key NCR market especially in the ultra-luxury segment with price appreciation tailwinds, the brokerage added.

Also read | NRIs likely to account for 20% of DLF’s total sales in FY23-24: Joint MD Aakash Ohri

The DLF stock has doubled investors’ money in the last year, surging around 104 percent. In comparison, benchmark Nifty has rallied 20 percent during this period.

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