DLF is a beneficiary of the buoyant real estate market

Stock to invest: DLF gave 36% returns in last one year; is DLF a good stock to buy? The management is confident of achieving its annual sales guidance of Rs.17,500 crore in 2024-25, aided by a strong launch pipeline for the second half of the current financial year. It has guided a launch pipeline with an estimated GDV of Rs.42,000 crore for 2024-25

DLF: The real estate player reported a strong 47% and 122% year-on-year growth in revenue and PAT in the September quarter. However, the presales bookings contracted 69% year-on-year to Rs.690 crore due to the lack of new launches amid delay in obtaining necessary approvals. Despite muted sales bookings, the company generated strong operating cash flows and maintained a net cash position (cash minus liabilities).

The management is confident of achieving its annual sales guidance of Rs.17,500 crore in 2024-25, aided by a strong launch pipeline for the second half of the current financial year. It has guided a launch pipeline with an estimated GDV of Rs.42,000 crore for 2024-25. It also aims to launch its luxury projects (The Dahlias, DLF 5 and Privana 3) in the fourth quarter of 2024-25, which will drive presales. The company maintained a strong performance track record and developed 178 projects. In terms of scale, it has a development potential of 220 million square feet (msf) across residential and commercial segments. It is a beneficiary of the buoyant real estate market, which is driven by factors such as increasing urbanisation, shifting demographics, aspirational lifestyles, and economic growth in the country.

The growing residential demand, expected growth in sustainable workplaces, growing population and rising income levels are adding further impetus to the sector’s growth. Policy interventions like RERA, increasing demand for larger homes and consumer preference for the luxury segment are driving the residential segment whereas rising demand for quality workplaces and expansion by Global Capability Centres are supporting the office segment.

On the other hand, the retail segment is thriving due to aspirational lifestyle, entry of foreign retailers, growing consumption and demand for quality malls. The management continues to take strategic steps to strengthen its business segments. In the development business, the focus is on tapping multiple geographies and developing margin-accretive products. For the rental business, the company is growing its portfolio through organic growth across both office and retail segments. The management expects a sharp improvement in occupancy of the DCCDL (a DLF group company) office portfolio from the second half of 2024-25.

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A significant land bank having a high embedded potential, robust pipeline of new products across both development and rental business, strong balance sheet and consistent cash flow generation are the key strongholds of the company. A recent HDFC Securities report lists robust sectoral trends, industry-wide consolidation, record-low inventory in its core market, increasing demand for branded luxury offerings and expansion of its annuity portfolio as the key growth drivers.

The stock has outperformed the market benchmark in the last one year with 35.6% returns compared to BSE Sensex with 22.5% returns.

Selection methodology: We pick the stock that has shown the maximum increase in ‘consensus analyst rating’ during the past three months. The consensus rating is arrived at by averaging all analyst recommendations after attributing weights to each of them (1 for strong buy, 2 for buy, 3 for hold, 4 for sell, 5 for strong sell). An improvement in consensus analyst rating indicates that the analysts are getting bullish on the stock. Only stocks with more than five analysts covering them are considered. You can see similar consensus analyst rating changes during the past week in ETW 50 table.

This story originally appeared on: India Times - Author:Faqs of Insurances