DLF reported strong operating performance overall; pre-sales for M9FY23 at Rs66bn, is tracking ahead of the guidance of Rs80bn for FY23. >80% of M9 pre-sales came in from new launches, and DLF is looking at launching another ~3msf in Q4 (5msf in M9FY23). Net debt reduction during Q3 was muted due to onetime capex refund settlement with DCCDL. DLF pre-sales came in at Rs25bn (in line) — ~85% was driven by new launches of Grove (Phase V) and Panchkula project. Collections for Q3 were healthy at Rs13bn (up 7% YoY), however net debt reduction was muted at Rs0.5bn, due to one-time capex refund of Rs5.8bn (to DCCDL JV).
In last 2 years, DLF has turned around its residential business by launching 12.5msf of projects worth sale potential of Rs130bn of which Rs110bn has been sold. Further, its completed inventory of Rs30bn is expected to be sold in next 2-3 years. P&L performance is expected to steadily improve as higher margin projects (DLF City and Phase V floors) come into revenue recognition.
DCCDL (JV with GIC) reported a marginal dip in blended occupancy to 89.6%. Gross leasing of 1.5msf was largely for under-construction projects of 5.4msf that have achieved 46% pre-leasing vs 30% QoQ. DCCDL revenues and Ebitda were flat QoQ. Net debt declined QoQ to Rs184bn, primarily on refund from DLF of Rs5.8bn.
Residential demand outlook remains robust, despite steep interest rate hike, therefore, analysts at IIFL Securities maintain buy with target price of Rs 430.
