Antique | DLF 2QFY24 result update – 231101

Antique | DLF 2QFY24 result update – 231101

Robust cash flow prospects; outlook remains strong

DLF’s 2QFY24 highlight is that the development company (DevCo – DLF) generated the highest surplus operating cash flow, leading it to turn into a net cash positive company. On the back of sustenance sales, sales booking in 2QFY24 came at INR 22.3 bn (9%/ 9% QoQ/ YoY). Strong launch pipeline of INR 197.0 bn in 2HFY24, including in DLF 5 sector and sector 77 in Gurugram. DCCDL, DLF’s rental arm, posted a rental income of INR 10.7 bn (2%/ 9% QoQ/ YoY). DevCo turned cash positive with net cash of INR 1.42 bn, while in DCCDL net debt declined QoQ by INR 3.0 bn to INR 180 bn. With receivables of INR 128 bn and construction costs to be incurred of INR 72 bn, the company is looking at a cash surplus of INR 57 bn to be generated over the next 3-4 years, excluding incremental sales. With the Gurugram real estate market witnessing strong momentum with a low inventory overhang of six months, DLF with its robust launch trajectory of INR 197 bn in 2HFY24 is expected to easily surpass sales booking of INR 150.0 bn in FY24, the company guidance is of INR 130 bn. We continue to maintain BUY with a revised TP of INR 687 (previously INR 655).

Investment Summary

We continue to remain positive on DLF given (a) The strong momentum in Gurugram with inventory overhang of six months, (b) Strong launch pipeline in 2HFY24, (c) Robust cash flow generation aiding balance sheet deleveraging and growth, (d) Huge monetizable land bank (at historical costs) in a housing upcycle—an important competitive advantage, (e) Excellent track record of timely project delivery, (f) Re-entry into the MMR market. DLF continues to remain our top pick since initiation (other top picks being Century Textiles, Kolte-Patil, and Prestige); we maintain BUY with a revised TP of INR 687 as we factor in the strong growth outlook on the residential segment. Key monitorables: Launches of DLF 5 and sector 77, and leasing in SEZ annuity portfolio.