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Informist, Thursday, May 15, 2025

By Rajesh Gajra

NEW DELHI – The new sales bookings of Delhi-National Capital Region-based realty behemoth DLF Ltd. are seen tumbling to a sustenance level of INR 20 billion-INR 27 billion in the March quarter after touching a record high of INR 120.9 billion in the previous quarter. The bookings will, however, be higher than the year-ago number of INR 15 billion. According to analysts, the ultra-luxury residential project, The Dahlias, in Gurugram, which garnered a record INR 118.16 billion of new bookings in the December quarter when it was launched, will contribute a chunk of the March quarter number as well, but this will be much lower in absolute terms.

The top line and bottom line performance of the company in a quarter is not immediately linked to the new sales booking performance of that quarter. DLF Chairman Rajiv Singh had said in meeting with analysts and investors on Mar. 21 that a real estate developer "cannot recognise income till you have kind of created a sort of binding interest in it," under the accounting standards and this applied to the company.

In Gurugram, rules of the Haryana government require the stamp duty to be paid on property deals when the title is passed, and the title can be passed to the buyer only when the developer receives the completion or occupation certificate, according to the DLF chairman. This meant that "in places like Gurgaon...,till you get an OC (occupation certificate), you can't start recognising revenue," Singh had said.

This means the revenue of DLF will be as per revenue from cumulative payments by home buyers till the December quarter on projects which have received the occupation certificate in that quarter, or the preceding one if the stamp duty payment spills over to the next quarter. On the annuity business of DLF, which includes subsidiary DLF Cyber City Developers Ltd., and the rental projects housed under DLF's standalone operations, revenue is recognised when rental payments are received or are due. The operating profit also consequently gets recognised in the accounting records with a big lag.

The consolidated net profit of DLF in the March quarter will likely fall 18% on year and 29% sequentially to INR 7.55 billion on the back of revenue from operations likely increasing only 3% on year and 44% on quarter to INR 22 billion, according to the average of estimates of six brokerages. The company will likely report a consolidated earnings before interest, tax, depreciation, and amortisation, or EBITDA, of INR 8.85 billion for the reporting quarter.

The net profit estimates range from a low of INR 2.60 billion by Motilal Oswal Financial Services to a high of INR 10.01 billion by Nuvama Wealth Management. The lowest estimate on DLF's revenue is INR 17.08 billion by HDFC Securities, while the highest is INR 31.84 billion by Elara Securities (India).

In the December quarter, DLF had reported a 61% on-year growth in consolidated net profit to INR 10.59 billion and a small 0.5% increase in consolidated revenue to INR 15.29 billion. Sequentially, the net profit and revenue had fallen 23% each in that quarter.

The new sales bookings of DLF are seen around INR 20 billion in the reporting quarter on sales of incremental units at The Dahlias project, according to Kotak Securities' institutional equities division. Motilal Oswal expects the sales bookings to be higher at INR 27 billion. "Post exceeding the full year (2024-25) sales guidance in 9m (nine months ended December), we expect healthy sustenance sales in Q4 (Jan-Mar)," Nuvama said in its earnings preview report for the company.

The rental operations subsidiary, DLF Cyber City, may report "a modest 7% YoY (year-on-year) growth in rentals to INR 12 billion owing to the recent sale of asset in Kolkata and healthy overall occupancy of 93%," Kotak said in its preview report. The overall revenue of DLF may, however, fall 18% on year to INR 17.44 billion, according to the brokerage.

The conversion cycles of new sales bookings to revenue in the NCR market "are elongating owing to delayed decision-making (by buyers)," HDFC Securities said in its preview report. The brokerage expects DLF's revenues in the March quarter to fall 20% on year to INR 17.08 billion.

The company may also report a lower operating profit and profitability for the March quarter as compared to the year-ago quarter due to the expected fall in revenue. Motilal Oswal expects DLF's EBITDA to fall 35% on year to INR 4.88 billion and the EBITDA margin to contract sharply to 24.8% from 35.3% a year ago. Kotak also estimates DLF's EBITDA to fall 35% on year. On the other hand, Nuvama forecasts a 2.2 times jump in EBITDA to INR 16.88 billion, but the brokerage did not specify the rationale.

The company will declare its March quarter and 2024-25 (Apr-Mar) financials Monday. Investors will monitor the management's commentary on FY26 guidance on new sales bookings, demand, and expectations on cash flows and debt levels.

At 1241 IST, shares of DLF were 2.2% up at INR 703.40 on the National Stock Exchange. The company's shares have fallen 1.6% since the closing price of INR 715.05 on Jan. 23, a day prior to the announcement of the December quarter earnings on Jan. 24.

Following are the Jan-Mar consolidated earnings estimates for DLF based on reports from six brokerage firms in descending order of estimate of net profit:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

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