dlf result updated

8/3/2019 DLF Result Updated

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Please refer to important disclosures at the end of this report 1

Y/E March (` cr) 3QFY12 2QFY11 % chg (qoq) 3QFY11 % chg (yoy)

Net sales 2,034 2,532 (19.7) 2,480 (18.0)

EBITDA 823 1,173 (29.9) 1,178 (30.2)

OPM margin (%) 40.4 46.3 (588)bp 47.5 (706)bp

PAT 258 372 (30.6) 466 (44.6)

Source: Company, Angel Research

DLF’s 3QFY2012 results were below our expectations. The company’s revenue

declined by 18.0% yoy to ` 2,034cr. OPM for the quarter came in at 40.4%,

down 706bp yoy, below our expectation of 43.7%. PAT declined by 44.6% yoy to

` 258cr, below our expectation of ` 414cr. We recommend Neutral on the stock.

Earnings below expectation: DLF reported an 18.0% yoy decline in its revenue to

` 2,034cr. Leasing volume dipped during the quarter to 0.42mn sq. ft. compared

to 0.66mn sq. ft. in 2QFY2012 and 1.97mn sq. ft. in 3QFY2011. The company

booked 3.3mn sq. ft. in 3QFY2012 compared to 1.3mn sq. ft. in 2QFY2012

and 2.5mn sq. ft. in 3QFY2011. OPM came in at 40.4%, down 706bp yoy, on

account higher input cost. Operating profit declined by 30.2% yoy to ` 823cr

because of lower revenue and margin compression. Interest cost grew by 44.8%

yoy (up 17.8% qoq) to ` 620cr due to increased leverage and lower capitalization

of interest on the back of project completion. PAT came in at ` 258cr, down

44.6% yoy (down by 30.6% qoq) and below our estimate of ` 414cr.

The company closed two IT Park deals worth ` 785cr during the quarter.

Outlook and valuation: DLF is optimistic on selling ~12mn sq. ft. in FY2012.

The company plans to change its sales mix by selling more plotted land during

the year. However, there is a risk to the company’s guidance, considering the

delay in approvals and slowdown in the recent months on the back of interest

rate hike. We expect DLF to book ~12mn sq. ft. in FY2012 and expect flat

volume growth in FY2013E, considering the weaker macro environment. Further,

DLF lacks near-term triggers, given the kind of muted visibility on debt reduction,

though the company plans to divest ` 6,000cr–7,000cr in 2–3 years to reduce

debt. Hence, we recommend Neutral on the stock.

Key financials (Consolidated)

Y/E March (` cr) FY2010 FY2011E FY2012E FY2013E

Net Sales 7,423 9,561 9,395 9,878

% chg (26.0) 28.8 (1.7) 5.1

Net Profit 1,720 1,640 1,454 1,679

% chg (61.5) (4.7) (11.3) 15.4

EBITDA Margin (%) 47.3 39.3 43.3 45.3

FDEPS (`) 10.1 9.7 8.6 9.9

P/E (x) 22.8 23.9 26.9 23.3

P/BV (x) 1.6 1.6 1.6 1.5

RoE (%) 7.3 6.7 5.9 6.6

RoCE (%) 6.8 6.0 6.6 7.2

EV/Sales (x) 8.1 6.5 6.7 6.5

EV/EBITDA (x) 17.1 16.5 15.4 14.4


NEUTRALCMP ` 231

Target Price -

Investment Period -

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 78.6

MF / Banks / Indian Fls 0.3

FII / NRIs / OCBs 16.1

Indian Public / Others 5.1

Abs.(%) 3m 1yr 3yr

Sensex 3.4 0.2 84.5

DLF 1.0 (6.8) 43.6

Real Estate

Avg. Daily Volume

Market Cap ( ` cr)

Beta

52 Week High / Low

39,162

1.5

281/173

1,265,288

DLFU@IN

Face Value ( ` )

BSE SensexNifty

Reuters Code

2

17,7735,390

DLF.BO

Sharan Lillaney

+91 22 3935 7800 Ext: 6811

[email protected]

DLF

Performance Highlights

3QFY2012 Result Update | Real Estate

February 13, 2012



DLF | 3QFY2012 Result Update

February 13, 2012 2

Exhibit 1: 3QFY2012 performance highlights

Y/E March (` cr) 3QFY12 2QFY11 % chg (qoq) 3QFY11 % chg (yoy)

Net Sales 2,034 2,532 (19.7) 2,480 (18.0)

Operating profit 823 1,173 (29.9) 1,178 (30.2)OPM (%) 40.4 46.3 (588)bp 47.5 (706)bp

Interest expenses (620) (526) 17.8 (428) 44.8

Depreciation (180) (175) 2.5 (161) 11.6

Other Income 362 45 708.2 114 217.2

PBT 385 516 (25.4) 703 (45.3)

Provision for Taxation (135) (147) (8.3) (203) (33.3)

Tax rate (%) 35.2 28.6 23.0 28.9

PAT before Extra-ordinary item 249 369 (32.3) 500 (50.1)

Exceptional (0) 4 (6)

Minority/Profit in associates 9 (0) (28)

PAT after Extra-ordinary item & MI 258 372 (30.6) 466 (44.6)

PAT Margin 12.7 14.7 (201)bp 18.8 (609)bp

EPS ( ` ) 1.5 2.2 (30.6) 2.7 (44.6)


Revenue down by 18.0% yoy

DLF’s revenue declined by 18.0% yoy to ` 2,034cr in 3QFY2012. The company

booked 3.3mn sq. ft and leased out 0.42mn sq. ft. during the quarter, down

78.6% yoy. The company continues to witness a slowdown and is concentrating

more on sale of plotted development. We expect the current scenario to continueover a couple of quarters.

Exhibit 2: Revenue witnesses a decline in 3QFY2012


OPM contracts by 706bp yoy to 40.4%

DLF’s operating profit declined by 30.2% yoy to ` 823cr on the back of lower

revenue and margin contraction during the quarter. OPM declined by 706bp yoy

to 40.4% (below our estimate of 43.7%), largely on account of higher input costs.

22.434.5

20.5

6.9

(18.0)

(75)

(55)

(35)

(15)

5

25

45

65

85

0

500

1,000

1,500

2,000

2,500

3,000

3QFY11 4QFY11 1QFY12 2QFY12 2QFY13

( % )

( `

c r )

Revenue (LHS) yoy change (RHS)




February 13, 2012 3

Exhibit 3: OPM trend


PAT below expectation

DLF’s PAT declined by 44.6% yoy to ` 258cr, which was well below our estimate of

` 414cr despite a sharp increase in other income, which increased by 217% yoy to

` 362cr ( ` 114cr). The decline in PAT was largely due lower revenue, OPM

contraction and higher interest cost during the quarter, which increased by 44.8%

yoy to ` 620cr in 3QFY2012 on the back of higher leverage on a yoy basis and

lower capitalization of interest because of project completion. Depreciation cost

increased by 11.6% yoy to ` 180cr during the quarter.

Exhibit 4: PAT trend


47.5

24.8

45.446.3

40.4

0

5

10

15

20

25

30

35

40

45

50

0

200

400

600

800

1,000

1,200

1,400


( % )

( `

c r )

EBITDA (LHS) EBITDA margin (RHS)

(0.4)

(19.2)

(12.8)(11.0)

(44.6)

(50)

(45)

(40)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

0

50

100

150

200

250

300

350

400

450

500


( % )

( `

c r )

PAT yoy change (RHS)




February 13, 2012 4

Exhibit 5: Residential volumes


Exhibit 6: Net leasing volumes down

Source: Company, Angel Research. Note: 0.42mn sq. ft. leased out and

0.20mn sq. ft. cancelled during the quarter

Exhibit 7: Projects under construction


2.5

3.8

2.2

1.3

3.3

0.0

0.5

1.0

1.5

2.0

2.53.0

3.5

4.0


( m n s q .

f t . )

1.7

1.4

0.7

0.2 0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8


( m n s q .

f t . )

57 56

53 52 53

45

25

30

35

40

45

50

55

60

2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

( m n s q .

f t . )




February 13, 2012 5

Investment argument

Higher leverage remains a concern

The DAL/Caraf merger, subdued new launches and purchase of Compulsorily Convertible Preference shares (CCPS), which were earlier issued by DAL to

SC Asia, have increased DLF’s debt-to-equity level to 0.9x. By the end of

3QFY2012, the company’s debt stood at ` 24,086cr. Further, promoters have

` 1,600cr of CCPS in the merged entity, which carries a dividend rate of 9%,

resulting in annual cash outflow of ` 140cr. These CCPSs are convertible post April

2011. Consequently, interest payments as a percentage of EBITDA remain on the

higher side (45%). DLF is targeting to reduce its net debt/equity to 0.9x by the end

of FY2012E. Reduction in the gearing level will depend on hiving off non-core

assets and successful new launches.

Outlook and valuation

DLF has a challenging task of bringing down its gearing levels in FY2012E for

getting fast approvals to have successful new launches and for monetizing its

non-core assets at a reasonable value. We estimate DLF to sell ~12mn sq. ft. of

residential volumes in FY2012E and expect flat growth in FY2013E. In our view,

there is a limited upside to our launch estimates, considering the steep price rise in

the recent months. For FY2012, we have assumed a 5% reduction in commercial

and retail prices, but flat growth in residential prices, from current levels. Further,

the company lacks near-term triggers, given the kind of muted visibility on debt

reduction and new launches. Hence, we recommend Neutral on the stock.




February 13, 2012 6

Profit & Loss Statement (Consolidated)

Y/E March (` cr) FY2009 FY2010E FY2011 FY2012E FY2013E

Total operating income 10,035 7,423 9,561 9,395 9,878

% chg (30.5) (26.0) 28.8 (1.7) 5.1Total Expenditure 4,445 3,911 5,808 5,328 5,398

Cost of construction propertiesincl land costs

2,769 2,072 3,523 3,097 3,198

Other Construction expenditure 1,223 1,373 1,713 1,639 1,617

Personnel 454 467 572 592 583

EBITDA 5,590 3,512 3,753 4,067 4,479

% chg (42.5) (37.2) 6.9 8.4 10.1

(% of Net Sales) 55.7 47.3 39.3 43.3 45.3

Depreciation& Amortisation 239 325 631 650 654

EBIT 5,351 3,187 3,122 3,418 3,825

% chg (44.4) (40.4) (2.0) 9.5 11.9(% of Net Sales) 53.3 42.9 32.7 36.4 38.7

Interest & other Charges 555 1,110 1,706 2,020 2,124

Other Income 396 428 584 555 544

(% of PBT) 7.6 17.1 29.2 28.4 24.2

Recurring PBT 5,192 2,505 2,000 1,952 2,245

% chg (45.7) (51.8) (20.1) (2.4) 15.0

Extraordinary Expense/(Inc.) - - - - -

PBT (reported) 5,192 2,505 2,000 1,952 2,245

Tax 675 702 459 488 561

(% of PBT) 13.0 28.0 23.0 25.0 25.0

PAT (reported) 4,517 1,802 1,541 1,464 1,684

Add: Share of earnings of asso. (21.1) 0.8 8.8 10.0 15.0

Less: Minority interest (MI) (27.5) 10.8 (7.2) (20.0) (20.0)

Prior period items - (94.2) 97.2 - -

PAT after MI (reported) 4,468 1,720 1,640 1,454 1,679

ADJ. PAT 4,517 1,802 1,541 1,464 1,684

% chg (42.8) (61.5) (4.7) (11.3) 15.4

(% of Net Sales) 44.5 23.2 17.1 15.5 17.0

Basic EPS (`) 26.2 10.1 9.7 8.6 9.9

Fully Diluted EPS (̀ ) 26.3 10.1 9.7 8.6 9.9

% chg (42.8) (61.5) (4.7) (11.3) 15.4




February 13, 2012 7

Balance Sheet (Consolidated)

Y/E March (` cr) FY2009 FY2010E FY2011 FY2012E FY2013E

SOURCES OF FUNDS

Equity Share Capital 339 339 340 340 340Preference Capital 1,396 5,920 1,810 1,810 1,810

Reserves& Surplus 22,418 24,173 24,182 24,823 25,437

Shareholders’ Funds 22,758 24,513 24,522 25,163 25,777

Minority Interest 634 628 575 459 479

Total Loans 16,320 21,677 23,990 24,990 26,490

Deferred Tax Liability (41) 251 (163) (184) (184)

Total Liabilities 41,066 52,989 50,734 52,238 54,372

APPLICATION OF FUNDS

Gross Block 8,487 17,884 19,828 19,019 20,112

Less: Acc. Depreciation 574 1,326 1,956 2,605 3,260

Net Block 7,912 16,558 17,872 16,413 16,853

Capital Work-in-Progress 5,688 11,129 10,312 11,343 12,478

Goodwill 2,265 1,268 1,384 1,520 1,520

Investments 1,402 5,505 996 1,180 1,180

Current Assets 31,622 27,306 33,272 35,637 35,830

Cash 1,196 928 1,346 1,534 1,188

Loans & Advances 9,712 7,593 7,271 8,485 7,637

Other 20,715 18,784 24,654 25,619 27,005

Current liabilities & Provisions 7,824 8,777 13,101 13,856 13,488

Net Current Assets 23,798 18,529 20,170 21,782 22,342

Mis. Exp. not written off - - - - -

Total Assets 41,066 52,989 50,734 52,238 54,372




February 13, 2012 8

Cash Flow Statement (Consolidated)

Y/E March (` cr) FY2009 FY2010E FY2011E FY2012E FY2013E

Profit before tax 5,192 2,505 2,000 1,952 2,245

Depreciation 239 325 631 650 654Change in Working Capital (4,521) 5,743 (960) (1,788) (1,158)

Less: Other Adjustments 376 911 1,706 2,020 2,124

Direct taxes paid (1,112) (856) (459) (488) (561)

Cash Flow from Operations 174 8,628 2,917 2,347 3,304

(Inc)./Dec. in Fixed Assets (3,249) (13,325) (1,126) (222) (2,228)

(Inc.)/Dec in Investments (444) (3,109) 4,509 (184) -

Interest received 102 127 - - -

Others - - (1,816) (283) 15.00

Cash Flow from Investing (3,590) (16,306) 1,567 (689) (2,213)

Issue of Equity 305 4,523 (4,110) - -

Inc./(Dec.) in loans 4,111 5,381 2,314 1,000 1,500

Dividend Paid (Incl. Tax) (372) (383) (565) (449) (813)

Interest Paid (1,601) (2,103) (1,706) (2,020) (2,124)

Cash Flow from Financing 2,443 7,417 (4,066) (1,470) (1,437)

Inc./(Dec.) in Cash (972) (261) 418 188 (346)

Opening Cash balances 2,168 1,196 928 1,346 1,534

Closing Cash balances 1,196 928 1,346 1,534 1,188




February 13, 2012 9

Key Ratios

Y/E March FY2009 FY2010E FY2011E FY2012E FY2013E

Valuation Ratio (x)

P/E (on FDEPS) 8.8 22.8 23.9 26.9 23.3P/CEPS 7.9 18.1 16.3 17.6 15.9

P/BV 1.7 1.6 1.6 1.6 1.5

Dividend yield (%) 0.9 1.0 1.9 1.9 2.5

EV/Sales 5.4 8.1 6.5 6.7 6.5

EV/EBITDA 9.7 17.1 16.5 15.4 14.4

EV / Total Assets 1.3 1.1 1.2 1.2 1.2

Per Share Data (`)EPS (Basic) 26.2 10.1 9.7 8.6 9.9

EPS (fully diluted) 26.3 10.1 9.7 8.6 9.9

Cash EPS 27.6 12.0 13.4 12.4 13.7

DPS 2.0 2.1 4.2 4.2 5.5

Book Value 134.0 144.3 144.4 148.2 151.8

Dupont Analysis

EBIT margin 53.3 42.9 32.7 36.4 38.7

Tax retention ratio 0.9 0.7 0.8 0.7 0.7

Asset turnover (x) 0.3 0.2 0.2 0.2 0.2

ROIC (Post-tax) 13.3 5.0 4.7 5.1 5.5

Cost of Debt (Post Tax) 3.4 4.2 5.8 6.2 6.2

Leverage (x) 0.6 0.8 0.9 0.9 1.0

Operating ROE 19.3 5.6 3.8 4.1 4.9

Returns (%)

ROCE (Pre-tax) 14.6 6.8 6.0 6.6 7.2

Angel ROIC (Pre-tax) 19.5 8.9 8.1 9.0 9.9

ROE 21.5 7.3 6.7 5.9 6.6

Turnover ratios (x)

Asset Turnover (Gross Block) 1.5 0.6 0.5 0.5 0.5

Inventory / Sales (days) 371 576 525 610 649

Receivables (days) 178 93 64 66 64

Payables (days) 345 410 436 645 629

WC cycle (ex-cash) (days) 725 988 695 759 765

Solvency ratios (x)Net debt to equity 0.7 0.8 0.9 0.9 1.0

Net debt to EBITDA 2.7 5.9 6.0 5.8 5.6

Interest Coverage (EBIT / Interest) 9.6 2.9 1.8 1.7 1.8




February 13, 2012 10

Disclosure of Interest Statement DLF

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns) : Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)

Research Team Tel: 022 - 4040 3800 E-mail: [email protected] Website: www.angeltrade.com

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Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and

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