DLF Ltd Management Discussions

1. ECONOMIC OVERVIEW

a) Global Economy

The global macro-economic environment remains challenging, influenced by geopolitical events such as trade tensions and tightened financial conditions. According to the revised outlook of the International Monetary Fund (IMF), global growth is projected to be at 2.8% in 2025 and 3% in 2026. The IMF anticipates a slower decline in the global headline inflation rate compared to earlier estimates, reaching 4.3% in 2025 and 3.6% in 2026.

b) Indian Economy

India remains a beacon of economic growth amidst global challenges. The National Statistics Office reported a 6.5% real GDP growth rate for FY 2024-25, underscoring the economys resilience.

Indias economy is poised to advance in the global arena. The IMF forecasts growth over the next two years for the Indian economy at 6.2% in 2025 and 6.3% in 2026, respectively.

The Reserve Bank of India also observed improvement in inflation expectations, leading to a reduction in benchmark rates.

a) Residential Segment

Indias residential real estate segment maintained its robust performance in the preceding year. According to Anarocks report, housing sales in the top seven cities reached -4.59 lakh units. Flowever, the overall sales value experienced a 16% increase, reaching 5.68 lakh crore. This indicates a sustained demand momentum and a strong preference for premium and luxury housing segments.

Inventory overhang across the top seven cities stood at 14 months at the end of Calendar Year (CY) 2024, representing a 62% decrease compared to the 30 months observed at the end of CY 2019.

b) Office Segment

Indias office real estate sector witnessed an all-time high absorption during CY 2024 at -7.34 million square meters (msm) [-79 million square feet (msf)]. The demand was primarily fuelled by Global Capability Centres (GCCs), Banking, Financial Services and Insurance (BFSI) and flexible space operators. Bengaluru accounted for the highest share of leasing activity, followed by Delhi-NCR, Mumbai and Flyderabad, collectively contributing over 70% of total leasing volumes. New supply additions during the period were estimated at -4.86 msm (-52.3 msf).

The sustained demand momentum would be attributed to a highly skilled workforce and competitive cost structures that the country offers. Occupier preferences remained centred on high quality workplaces, offering sustainability, safety, wellness-driven and efficient design specifications.

c) Retail Segment

Indias retail sector sustained its growth trajectory in 2024, driven by healthy consumption trends. This positive momentum is anticipated to persist in 2025, as the malls refine their tenant mix and provide dynamic shopping, entertainment and dining experiences.

The anticipated completion of several investment-grade malls is likely to expand leasing opportunities for both international and domestic retailers. Consequently, Indias retail leasing activity is projected to remain robust over the medium term.

CY 2024 saw a supply of ~0.11 msm (~1.2 msf), while absorption was -0.60 msm (-6.4 msf).

a) Material Developments

- The Company launched its latest super-luxury offering - The Dahlias in DLF5, Gurugram with an estimated sales potential of 35,000 crore, of which -39% was sold within the year.

- Credit ratings for DLF were re-affirmed with the outlook being revised to Positive from Stable. The credit ratings for DLF are CRISIL AA/ Positive outlook and ICRA AA/ Positive outlook.

- CRISIL upgraded the credit rating for DLF Cyber City Developers Limited (DCCDL), a material subsidiary of the Company to CRISIL AAA/ Stable outlook.

- DLF Info City Developers (Kolkata) Limited, a wholly-owned subsidiary company of DCCDL had entered into a definitive agreement to sell and transfer on slump sale basis of its Kolkata Tech Park business undertaking for an aggregate consideration of 637 crore. The transaction was consummated during the fiscal.

- The Company entered into definitive agreements for sale of its IT/ ITeS SEZ, comprising freehold land parcel, admeasuring -25.90 acres, situated in Kolkata along with constructed building - DLF Tech Park with a gross leasable area of -10,54,357 square feet. The agreed consideration is 693 crore, subject to requisite adjustments.

- DLF Flome Developers Limited, a material wholly-owned subsidiary of the Company, acquired 49.997% of the total paid-up equity share capital and compulsorily convertible debentures, held by Reco Greens Pte. Limited, an affiliate of GIC, Singapore in DLF Urban Private Limited.

b) Revenue and profitability (Consolidated)

Consolidated revenue (including other income) stood at Rs 8,996 crore during the fiscal. EBITDA stood at Rs 3,111 crore, reflecting a Y-o-Y growth of 17%. Total comprehensive income (attributable to the owners of the Company) stood at Rs 4,356 crore, as compared to Rs 2,730 crore in the corresponding period, reflecting a growth of 60%.

DCCDL reported a consolidated total income of Rs 6,448 crore, reflecting a 9% growth over the previous period, primarily led by the rental growth in the office and retail portfolio. DCCDLs consolidated EBITDA stood at Rs 4,949 crore in FY 2024-25 in comparison to Rs 4,478 crore in FY 2023-24, reflecting an 11% growth over the previous period. Total comprehensive income stood at Rs 2,461 crore, reflecting a 46% growth over the last year.

c) Balance Sheet

The Companys consolidated Net Worth (excluding capital reserves) was recorded at Rs 42,453 crore. The increase was primarily on account of retained profits.

The Company continues to generate healthy cash flow from its operations, resulting in the balance sheet turning into cash positive. The net cash position at the end of the fiscal stood at Rs 6,848 crore.

The key ratios arising out of the performance in the last fiscal are summarized below:

a) Development Business

The Companys development business delivered a strong performance with a record new sales bookings of Rs 21,223 crore during the fiscal, reflecting a growth of -44% compared to previous fiscal.

The strong performance was primarily driven by the following major launches during the fiscal:

- Super-luxury project - The Dahlias in DLF 5, Gurugram, which generated over Rs 13,744 crore in new sales bookings.

- Second phase of its luxury project - DLF Privana West in Sector 76/77, Gurugram, generating

5,600 crore in new sales bookings.

b) Annuity Business

The annuity business, comprising assets owned by the Company and its subsidiaries (including DCCDL), delivered steady growth during the fiscal. The operational portfolio stood at -4.18 msm (-45 msf) with an average occupancy of -94%. During the period, -0.19 msm (-2 msf) was completed and delivered at DLF Downtown, Gurugram.

c) Other Business

DLFs other businesses also demonstrated consistent performance. The hospitality portfolio, including The Lodhi and Hilton Garden Inn, recorded revenues of Rs 521 crore in FY25. Club operations across integrated developments and premium residential hubs contributed to enhanced community engagement.

5. OUTLOOK & STRATEGY

The Company delivered strong performance in FY25 across all parameters. The Company remains committed towards continued focus on customer centricity, execution excellence, strong cash flow generation and disciplined capital allocation. Key priorities for the Company are enlisted below:

i) Development Business

The Companys development business is centered around the development and sale of the following key products:

- High-rise condominiums;

- Low-rise independent floors;

- Plotted development; and

- Shop-cum-Offices.

This business has an identified pipeline of new products with a total sales potential of over Rs 1.1 lakh crore. Out of this identified pipeline, the Company has launched projects with sales potential of 40,600 crore in FY25 and recorded new sales bookings of 19,344 crore from these new launches.

The Company will endeavour to bring these new offerings to the market and continue to leverage its strong brand positioning, high-quality products and favourable demand drivers to deliver consistent performance. The Company anticipates that its luxury/ super-luxury products, coupled with its low-cost land bank, will continue delivering consistent margin accretion and healthy cash flow generation.

In addition to the identified pipeline, the Company also possesses development potential of -13.38 msm (-144 msf) (including Transit Oriented Development (TOD)/ Transferable Development Rights (TDR) potential), providing clear growth visibility for its development business over the coming years. Further, given the strong balance sheet and healthy cash position, the Company will continue to evaluate opportunistic replenishment to further enhance its existing potential.

ii) Annuity Business

The Company has a strong and diversified annuity business comprising of:

- development and leasing of offices;

- development and leasing of retail malls;

- asset management (Common Area Maintenance/ Services business); and

- Hospitality vertical including Hotels, Clubs and Food & Beverages.

The operational rental portfolio stood at -4.18 msm (-45 msf) with occupancy of -94% at the end of the year. The rental business has been and continues to be a steady growth driver for the Company.

Indias office landscape remains favourable for growth, as the vast pool of skilled workforce, coupled with competitive cost structures, continues to be a strong draw for multinational and large occupiers. On the backdrop of anticipated demand momentum, the Company has accelerated its capital expenditure (capex) programme to grow its office portfolio and has identified a strong pipeline of new products, totalling -1.86 msm (-20 msf) across gateway cities including Gurugram, Chennai, Hyderabad and Noida.

The Company also anticipates continued momentum across the retail business and has embarked on creating new retail destinations across micro-markets in Gurugram, Delhi and Goa. It expects to complete -0.13 msm (-1.4 msf) across the three new malls in FY26.

Pre-leasing trends remained strong and with sustained demand momentum across these products and geographies, the Company expects that its rental revenue should surpass Rs 10,000 crore in the medium term.

In addition, the identified pipeline, the Annuity business also possesses further development potential of -5.77 msm (-62 msf) (including TOD/ TDR potential) providing clear growth visibility for the annuity business beyond the identified pipeline for long-term growth.

iii) Healthy Balance Sheet

The Company has already achieved its stated target of making the Development business net debt zero. Now, the Company has further set a goal of making the development business gross debt zero in the near term. The Company is confident of achieving this goal, supported by a strong cash position and anticipated cash surplus generation from the business.

The Company is committed to accelerate its capex spends towards portfolio growth while ensuring that the gearing in the annuity business continues to remain at healthy levels. It expects to maintain a Net Debt to EBITDA ratio of ~3x.

iv) Prudent Capital allocation and healthy Shareholder returns

The Company remains committed to follow a prudent capital allocation policy which enables healthy growth along with enhanced shareholder returns. The Company expects to invest its cash surplus in enhancing its existing land bank, ensuring product readiness and capex for growing its annuity business.

Shareholder returns continues to be a cornerstone for the capital allocation policy and it strives to enhance shareholder returns through steady dividend growth. The Company has grown its dividend payout at a compounded growth of 31 % since FY21.

6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

DLF has established a robust internal control framework that aligns with the scale, complexity and evolving risk environment of its operations. The control systems are designed to ensure accurate financial reporting, asset protection, operational efficiency and compliance with applicable laws and regulations across all business units.

The internal audit function operates under the supervision of the Audit Committee through a comprehensive risk-based annual audit plan. Independent internal and external audits are conducted across critical business processes and the findings are monitored through an automated audit management system to ensure timely resolution of action items and mitigation of identified risks.

Throughout the year, the Company has further enhanced its digital governance capabilities by implementing Enterprise Resource Planning (ERP) - integrated workflow systems, strengthening vendor due diligence protocols and deploying automated dashboards for real-time compliance monitoring. The Enterprise Risk Management (ERM) framework has been reviewed and updated to reflect sector-specific, operational and macro-economic developments.

The Audit Committee continues to regularly review internal audit findings, statutory audit reports and key risk indicators. DLF remains committed to maintain the high standards of governance, process discipline and transparency across all operational and functional areas.

The Company has a Risk Management Committee to frame, implement and monitor a robust risk management plan to identify and mitigate potential risks for the business. Identification and mitigation plans are done on a continuous basis as part of the process and periodic reviews are conducted on effective implementation and monitoring of these Enterprise Risk Management (ERM) plans.

The Company has also created dedicated frameworks and systems to ensure and monitor compliances throughout its business. The automated compliance systems follow a periodic digital reporting and monitoring cycle along with regular on-site reviews of regulatory and technical compliances.

Further, the Company is undergoing a significant transition of upgrading its current ERP to SAP S4HANA ERP system which should further enhance efficiencies and ensure tighter control on processes and reporting.

7. HUMAN RESOURCES

The Company remains committed to invest in the growth and development of its people, recognizing it as a critical enabler of business success. Anchored in this belief, the Company continued to drive a comprehensive employee development strategy that promotes continuous learning, cross-functional collaboration and career growth. In alignment with its business expansion, the Company scaled hiring efforts across the project management, design, sales, marketing and support functions. Additionally, the Company visited premier campus and made offers to fresh graduate engineers and architects. The previous batch trainees also completed a structured six-month journey with orientation, functional training, site immersion and shadowing and were placed across business units till January 2025. To nurture internal mobility and leadership readiness, the Company encouraged internal job postings and launched focused mentoring for high-potential employees. Leadership capability was further strengthened through initiatives like the DLF Advancing Leaders Programme (in partnership with MDI, Gurugram), the DLF Young Leaders Programme and the LEAP journey for new manager. The Construction Ed Academy continued to anchor technical upskilling with curated workshops, certifications and training on digital tools such as Building Information Modelling (BIM) and Autodesk Construction Cloud (ACC). To foster a culture of knowledge sharing and domain excellence, 11 Technical Communities of Specialization were activated, conducting 78 connects and engaging over 700 employees across functions.

As on 31 March 2025, DLF Group had 3,103 employees, including the workforce engaged in the hospitality division.

The Companys holistic wellness programme educates and guides employees around work-life balance and the importance of a healthy lifestyle, emotional, physical well-being and prevention of diseases. Annual medical check-ups, structured monthly health programmes, health bulletins, health talks and awareness campaigns are periodically conducted. The Company instituted attractive comprehensive Group Mediclaim and Accident Insurance Policies including emergency response facilitation, alliances with hospitals and diagnostic centres as well as consultation facilities with an in- house doctor and counsellor.

8. SUSTAINABILITY

DLF continued to build on its leadership in sustainable development during FY25, with its operational portfolio comprising over -3.91 msm (-42 msf) of LEED Platinum certified space under the Operations and Maintenance category.

DLF Cyber City, Chennai was awarded LEED Platinum Certification under the City & Community rating system, further reinforcing the Companys commitment to create regenerative, future-ready urban ecosystems.

The Company retained its position as a global leader in LEED Zero Certifications, with more than -3.72 msm (-40 msf) certified for Net Zero Water.

Several additional buildings including Building 8, Building 10 and Infinity Tower in Gurugram, were awarded LEED Zero Waste Certifications during the year, expanding DLFs portfolio of circular and resource-efficient developments.

9. OUTLOOK ON RISKS AND CONCERNS

DLF operates in a dynamic and evolving environment that presents multiple risk vectors across the macro-economic, regulatory, operational and market domains. Key macro-economic risks include persistent inflationary pressures, interest rate volatility and global geopolitical disruptions, all of which may influence customer sentiment, cost structures and capital allocation.

On the regulatory front, the business remains exposed to changes in development guidelines, environmental clearance processes, taxation frameworks and zoning regulations that can affect project viability and timelines. Operationally, the Company continues to monitor and address risks associated with execution delays, supply chain disruptions and cyber security threats that may impact business continuity and stakeholder trust.

DLF follows a structured ERM framework that facilitates the proactive identification, evaluation and mitigation of key risks across business functions. Risk registers are maintained at the business unit level and are reviewed periodically by senior management and the Audit Committee.

The Companys diversified launch pipeline, robust financial discipline and governance-driven culture serves as the key mitigants against emerging risks. DLF remains focused on strengthening its organizational resilience through forward-looking risk controls, scenario analysis and institutionalization of strong internal processes to ensure sustainable long-term performance.

Cautionary Statement

The above Management Discussion and Analysis may contain certain forward-looking statements within the meaning of applicable security laws and regulations. These pertain to the Companys future business prospects and business profitability which are subject to several risks and uncertainties and the actual results could materially differ from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, competition, economic growth in India, ability to attract and retain highly skilled professionals, time and cost over-runs on contracts, Government policies and actions with respect to investments, fiscal deficits, regulations etc.

In accordance with the Regulations on Corporate Governance, as approved by the Securities and Exchange Board of India, shareholders and readers are cautioned that in the case of data and information external to the Company, no representation is made on its accuracy or comprehensiveness, though the same are based on the sources thought to be reliable. The Company does not undertake to make any announcement in case any of these forward-looking statements become materially incorrect in future or update on any forward-looking statements made from time to time on behalf of the Company.