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Informist, Tuesday, Oct. 22, 2024

 

By Rajesh Gajra

 

MUMBAI – The profitability and bottom line performance of real estate developer DLF Ltd will likely have deteriorated in the quarter ended September compared to the same quarter a year ago, even as the top line growth would likely have been stable and higher than the previous two quarters. The revenue is seen rising on the back of sales from existing inventory since no key projects were launched during the September quarter.

 

The company's consolidated net profit for the September quarter will likely be INR 6.62 billion, up 6.4% on year and 2.6% on quarter, according to an average of estimates from five brokerages. The net profit estimates range from a low of INR 6.14 billion to a high of INR 7.34 billion. If the actual reported net profit matches the estimate, the growth will be the lowest in 10 quarters, data from Informist Credit Standard shows.

 

Consolidated revenue of DLF in Jul-Sept is seen at INR 13.85 billion, 2.8% higher than the year ago quarter and up 1.7% sequentially. The brokerage estimates for revenue range from a low of INR 12.94 billion to INR 14.58 billion. A 2.8% on-year projected increase, if it comes true, will be an improvement over the 4.3% on-year decline in revenue in the June quarter but lower than the 3.5% increase in revenue in the year ago quarter, the data showed.

 

The operating profit, as denoted by the earnings before interest, tax, depreciation, and amortisation, will likely be INR 3.81 billion, according to an average of estimates from four brokerages. The EBITDA estimates vary from a low of INR 2.09 billion to a high of INR 5.12 billion.

 

According to Motilal Oswal Financial Services, DLF's sales performance in the September quarter "is expected to be driven by inventory at existing projects as the company did not launch any key projects during the quarter." The brokerage expects DLF to clock bookings of INR 20 billion in Jul-Sept, down 10% on year, and expects the revenue to remain flat at around INR 14 billion.

 

DLF is strong in the Delhi-NCR market. "As the Gurugram housing market continues to witness strong momentum with shortage of inventory from grade A developers, thus, the sales momentum becomes dependent on new launches," Antique Stock Broking said in its preview report.

 

The brokerage said that since DLF is the dominant player in this market it sets the benchmark. However, since DLF had no new launches in the September quarter it would have recorded mostly sustenance sales. Antique Stock Broking expects DLF to have done sales booking of only INR 6 billion, and said that it has removed DLF from its top picks since the last two quarters. "DLF may witness a drop in sales bookings y-o-y (on year) due to absence of key project launches," brokerage Sharekhan said in its preview report.

 

The EBITDA of DLF is likely to have got hit by rise in construction costs due to commencement of executions in new projects launched in the previous 15 months. DLF Managing Director and Chief Financial Officer Ashok Tyagi said in a post-earnings conference call with analysts on Jul. 26 that construction costs "will go up for sure" due to the contractors having got mobilised and executions commenced for the Arbour project launched in December 2023. For Privana West project launched in April this year, a similar process "should begin in next couple of months." Tyagi said that "in about a couple of quarters you would actually see construction hitting full throttle."

 

The company will detail its earnings on Friday. Post-results, investors will monitor management updates on new residential project launches in the current quarter and the March quarter. Comments on the operating costs trajectory will also be keenly followed. Nuvama Wealth Management said rental income in the commercial segments also needs to be watched.

 

Shares of DLF Tuesday closed 5.3% lower at INR 815.15 on the National Stock Exchange.

 

Following are the Jul-Sept consolidated earnings estimates for DLF based on estimates from five brokerages: 

 

Brokerage firm	Net sales	Net profit	EBITDA
	-----------(In INR million)----------
HDFC Securities Ltd	12,942	6,425	2,096
Kotak Institutional Equities	14,578	6,805	3,475
Motilal Oswal Financial Services Ltd	14,016	7,340	5,125
Nuvama Wealth Management Ltd	13,298	6,414	4,591
Sharekhan Ltd	14,430	6,140	---
Average	13,853	6,625	3,822

 

End

 

Edited by Ashish Shirke

 

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