Dlf Phillip Cap

8/10/2019 Dlf Phillip Cap

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Please refer

to

Disclosures

and

Disclaimers

at

the

end

of

the

Research

Report.

DLF Ltd. Q2FY15 results: Regulatory headwinds continue

Real Estate: Quarterly Update 14 November 2014

PhillipCapital (India) Pvt. Ltd.

DLF Q2FY15 Results were ahead of our estimates mainly on account higher than

expected revenue

growth

&

EBITDA

margins.

Key Highlights of the results

• Revenue grew marginally by 3% (YoY) at Rs 20bn. EBITDA margins were

expanded by 910 bps to 39.5%. EBITDA grew by 34% (YoY). PAT stood at Rs 1bn

(up 9% YoY). We note that the interest cost up 8% on sequentially basis. Gross

debt would have increase by at least Rs 5.6bn. We note that during the quarter,

a wholly subsidiary had made impairment provision of Rs 381mn.

• Management stated that they might miss their guidance as far as sales volume is

• Management stated the forthcoming launches (in addition to the existing

Camellias) will aid in meeting its new sales target. These launches are:‐

o New City Gurgaon – Company plan for this project would be to structure

the offering for pricing and payment options to generate volume and

money. It

will

be

independent

floors.

o Capital Greens (SBM) Delhi – Ticket size for this project will be at lower

end of existing Capital greens project. Project size is 0.3 sft.

o Crest Phase 2 – Pricing would be in line with the existing project.

• Company sees some uptick in lease rental rates and hence allocating more capex

for this category. Company expects rental income of Rs 26bn by FY17E; this

would be driven by 3 msf on WIP in office space, Noida mall and escalations.

Mall of India at Chandigarh should be commissioning by Q1FY16. Net leasing

area 0.3 msf during Q2FY15 vs 0.71 msf during Q1FY15.

• Time frame for revenue recognition for existing projects:

o Camellias project‐ revenue is being recognized

o Crest‐ Revenue recognition as per new POCM. Management guided the

revenue

recognition

to

hit

by

Q4FY15.

o Sky Court‐ Revenue recognition as per new POCM. Management guided

the revenue recognition to hit by Q3FY15.

o Ultima‐ Revenue recognition as per new POCM would take 3‐4 quarters

to hit the revenue recognition criteria.

• Sequentially cash flow improvement is on account of two subsidiaries ceases to

be subsidiaries i.e. ‐ Panchkula and Raidurg (Hyderabad). Company has received

Rs5 bn for Raidurg property. The transaction would have contributed to Rs 8 bn

cash flow improvement.

• Asset monetization plan‐ Company has land parcels in Goa, South etc which can

be monetized. Moreover the company may look at joint developments and

private equity in some of the projects.

• Total sales booked for Q2FY15 in the residential segment were at 0.61MSF as

against 0.38MSF

in

Q1FY15

and

0.9MSF

in

Q2FY14.

During

the

quarter,

DLF

V

has

shown the early signs of improvement. Sales volume in most geography shall

continue at a moderate pace similar to FY14.

Valuations: The recent SEBI’s order which banned the Company and its promoter

from accessing the capital market along with other regulatory headwinds such as

levy of Rs6.3 bn penalty by COMPAT, the cancellation of Wazirabad (in Gurgaon)

Land allotment add to the headwinds which the company face. Moreover, The weak

operating environment coupled with Rs200 bn debt adds to cash flow challenges a

strong rental income portfolio will aid the company. We downgrade to Neutral on

the regulatory challenges.

NEUTRAL DLFU IN | CMP RS 142

TARGET RS 152 (+8%)

Company Data

O/S SHARES (MN) : 1781

MARKET CAP (RSBN) : 253

MARKET CAP (USDBN) : 4.1

52 ‐ WK HI/LO (RS) : 243 / 100

LIQUIDITY 3M (USDMN) : 46.8

FACE VALUE (RS) : 2

Share Holding Pattern, %

PROMOTERS : 74.9

FII / NRI : 20.0

FI / MF

:

0.4NON PROMOTER CORP. HOLDINGS : 0.8

PUBLIC & OTHERS : 3.9

Price Performance, %

1mth 3mth 1yr

ABS 35.1 ‐27.8 ‐2.6

REL TO BSE 28.7 ‐35.2 ‐40.1

Price Vs. Sensex (Rebased values)

0

20

40

60

80

100

120

140

160

Apr‐11 Apr‐12 Apr‐13 Apr‐14

DLF BSE Sensex

Source: PhillipCapital India Research

Other Key Ratios

Rs mn FY14 FY15E FY16E

Net Sales 82,980 77,251 92,069

EBIDTA 24,854 28,781 33,706

Net Profit 9,980 2,026 3, 054

EPS, Rs 5.8 1.2 1.8

PER, x

24.3 119.6 79.4

EV/EBIDTA, x 14.4 14.1 12.2

P/BV, x 0.8 0.8 0.9

ROE, % 3.4 0.7 1.1

Debt/Equity (%) 56.8 77.9 82.8

Source: PhillipCapital India Research Est.

Abhishek Ranganathan (+ 9122 6667 9952) [email protected]

Neha Garg (+ 9122 6667 9996) [email protected]



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14 November 2014 / INDIA EQUITY RESEARCH / DLF LTD QUARTERLY UPDATE

Q2FY15 Results (Consolidated)

Rs mn Q2FY14 Q1FY15 Q2FY15 YoY QoQ

Sales and other receipts 19,561 17,252 20,132 3% 17%

Cost of land, plots, development rights, constructed

properties and others 8,781 7,129 8,369 ‐5% 17%

Gross Profit 10,780 10,123 11,763 9% 16%

Employee benefit

expenses

1,857

741

930

‐50% 26%

Other expenses 2,975 2,013 2,872 ‐3% 43%

EBITDA 5,948 7,369 7,961 34% 8%

Depreciation, amortisation and impairment 1,660 1,345 1,394 ‐16% 4%

Other income 2,685 1,264 1,224 ‐54% ‐3%

EBIT 6,974 7,289 7,791 12% 7%

Finance costs 6,091 5,581 6,031 ‐1% 8%

Profits before tax and exceptionals 883 1,708 1,760 99% 3%

Exceptional Items (797) (295) (381)

PBT 1,680 1,413 1,379 ‐18% ‐2%

Tax 855 302 431 ‐50% 43%

Net profit 825 1,111 948 15% ‐15%

Minority interest ‐ share of loss/ (profit) 127 166 158 25% ‐5%

Share of profit/ (loss) in associates 10 (1) 1 ‐89% ‐179%

Net profit for the period (before prior period

adjustments)

962

1,276

1,107

15% ‐

13%

Prior period adjustments (net) 39 2 (16) ‐143% ‐1193%Reported Net Profit 1,001 1,278 1,091 9% ‐15%

Key Ratios (%)

Gross Margins 55.1% 58.7% 58.4%

Employee benefit expenses 9% 4% 5%

Other expenses 15% 12% 14%

EBITDA margins 30% 43% 40%

Tax Rate 51% 21% 31%

Source: Company, PhillipCapital India Research

Balance Sheet (Consolidated)

Q1FY15 Q2FY15

EQUITY AND

LIABILITIES

Shareholders’ funds 10

Share capital 21,560 21,556

Reserves and surplus 271,070 271,303

Minority interests 1,860 1,661

Long‐term borrowings 166,360 171,409

Other long term liabilities 22,010 21,788

Long‐term provisions 510 530

Short‐term borrowings 31,660 32,281

Trade payables 19,350 20,325

Other current liabilities 124,300 120,984

Short‐term provisions 6,250 2,983

Sub Total 181,560 176,573

Total 664,930 664,820

ASSETS

Net Fixed Assets 237,700 238,673

Goodwill on consolidation 11,970 12,044

Non‐current investments 3,840 4,931

Deferred tax assets (Net) 11,250 12,473

Long‐term loans and advances 38,760 41,604

Other non‐current assets 560 812

Sub Total 304,070 310,538

Current investments 23,440 20,380

Inventories 184,370 172,789

Trade receivables 15,130 15,195

Cash and bank balances 17,730 24,031



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Short‐term loans and advances 23,190 21,981

Other current assets 97,010 99,908

Sub Total 360,860 354,282

Total 664,930 664,820


The company achieved sales of 0.61 MSF in Q2FY15 as against 0.91 MSF in Q1FY15, with

Q1FY15 sales booking at 0.38 MSF; it included ~0.2 MSF sales in Gurgaon, ~0.02MSF in

New Gurgaon and ~0.39MSF in rest of India.

Quarterly Residential Sales Trend

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15

( i n M S F )


In office space, there was pick‐up evident with net leasing for the quarter up at 0.3 MSF

as against 0.57 MSF in Q2FY14. This apart leasing status either improved or remained

steady for most other properties.



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Net area leased during quarters

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

Q1 F Y 1 3

Q2 F Y 1 3

Q 3 F Y 1 3

Q 4 F Y 1 3

Q1 F Y 1 4

Q2 F Y 1 4

Q 3 F Y 1 4

Q 4 F Y 1 4

Q1 F Y 1 5

Q2 F Y 1 5

( i n M S F )


Debt reduction target of Rs 185bn in FY15

Debt levels

Debt Position Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15

Gross Debt(Net of equity shown as Debt/JV Co Debt) 242,980 243,610 223340 229,450 240,820

Pref. Shares 10,380 10,610 10720 2,020 2,020

Gross Debt Position(Net of equity shown as Debt/JV Co Debt) 234,620 235,020 214640 231,470 242,840

Less: Cash In Hand 35,730 32,570 28610 40,210 43,400

Less: Exchange Fluctuations 3,810 3,190 ‐770

Net Debt Position 195,080 199,260 185,260 191,260 199,440


Project Status

Area Sold in

Projects Region Q2FY15 Q4FY14 Q1FY15 Q2FY15

Under

Execution

New Town Heights & express greens Gurgaon 3.3 4.09 4.09 3.3 Yes

Skycourt Gurgaon 1.25 1.16 1.17 1.17 Yes

Ultima Gurgaon 2.17 0.63 0.63 0.65 Yes

Regal Garden Gurgaon 1.03 0.85 0.86 0.86 Yes

Primus Gurgaon 1.24 1.22 1.21 1.21 Yes

Almeda Gurgaon Yes

Garden City ‐91‐92 Gurgaon 3.56 3.37 3.33 3.34 Yes

Horizon Centre Gurgaon 1.19 0.52 0.52 0.52 Yes

Corporate Green Gurgaon 0.87 1.58 0 0 Yes

Crest Gurgaon 2.61 0.84 0.84 0.84 Yes

Camillas Gurgaon 3.55 0.45 0.49 0.72 Yes

Capital Greens Delhi/Mumbai/ROI 5.2 5.2 5.2 5.2 Yes

Okhla Delhi/Mumbai/ROI 0.52 0.52 Yes

GK Kings Court Delhi/Mumbai/ROI 0.23 0.13 0.16 0.17 Yes

Indore Delhi/Mumbai/ROI 2.46 1.12 1.17 1.23 Yes

NTH‐Kolkota Delhi/Mumbai/ROI 1.68 1.64 1.65 1.65 Yes

Bhubneshwar Delhi/Mumbai/ROI 0.55 0.36 0.41 0.42 Yes

Kochi Delhi/Mumbai/ROI 2.58 2.31 2.31 2.31 Yes

Chennai Delhi/Mumbai/ROI 3.8 3.36 3.33 3.34 Yes

Bangalore Delhi/Mumbai/ROI 5.03 4.64 4.67 4.71 Yes

Hyderbad Delhi/Mumbai/ROI 3.44 2.64 2.74 2.76 Yes



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Lucknow Delhi/Mumbai/ROI 3.1 3.1 2.91 2.92 Yes

Panchkula Delhi/Mumbai/ROI 4.03 3.56 3.55 3.55 Yes

Mullanpur Delhi/Mumbai/ROI 4.23 3.75 3.8 3.81 Yes

Shimla Delhi/Mumbai/ROI 0.07 0.06 0.06 0.06 Yes

Kasauli Delhi/Mumbai/ROI 0.57 0.23 0.23 0.24 Yes

Total 57.74 47.33 45.8 5 44.98




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Financials

Income Statement

Y/E Mar, Rs mn FY13 FY14 FY15E FY16E

Net sales

77,728

82,980

77,251 92,069

Growth, % ‐19 7 ‐7 19

Total income 77,728 82,980 77,251 92,069

Raw material expenses ‐33,559 ‐38,804 ‐28,181 ‐35,440

Employee expenses ‐5,957 ‐5,759 ‐6,047 ‐7,257

Other Operating expenses ‐11,949 ‐13,563 ‐14,241 ‐15,666

EBITDA (Core) 26,263 24,854 28,781 33,706

Growth, % (32.7) (5.4) 15.8 17.1

Margin, % 33.8 30.0 37.3 36.6

Depreciation ‐7,962 ‐6,629 ‐4,312 ‐4,943

EBIT 18,301 18,225 24,469 28,764

Growth, % (32.7) (5.4) 15.8 17.1

Margin, % 33.8 30.0 37.3 36.6

Interest paid ‐23,140 ‐24,633 ‐29,744 ‐33,338

Other Non‐Operating Income 13,229 14,916 8,000 8,8 03

Non‐recurring

Items

0

0

0 0

Pre‐tax profit 8,390 8,508 2,725 4, 228

Tax provided ‐1,251 836 ‐899 ‐1,395

Profit after tax 7,139 9,344 1,826 2, 834

Others (Minorities, Associates) 486 636 200 220

Net Profit 7,625 9,980 2,026 3, 054

Growth, % (37.8) 30.9 (79.7) 50.7

Net Profit (adjusted) 7,625 9,980 2,026 3, 054

Unadj. shares (m) 1,699 1,707 1,707 1,7 07

Wtd avg shares (m) 1,699 1,707 1,707 1,7 07

Balance Sheet


Cash & bank 18,441 24,420 36,643 43,001

Debtors

16,533

15,612

14,063 12,672

Inventory 176,455 184,886 186,448 187,720

Loans & advances 53,304 58,047 50,257 55,704

Other current assets 84,805 94,834 88,196 82,022

Total current assets 349,538 377,800 375,606 381,119

Investments 13,337 8,912 8,021 7,2 19

Gross fixed assets 218,269 199,855 231,376 262,898

Less: Depreciation ‐34,420 ‐41,049 ‐45,362 ‐50,304

Add: Capital WIP 77,360 77,360 77,360 77,360

Net fixed assets 261,209 236,165 263,374 289,953

Total assets 639,705 634,846 658,969 690,259

Current liabilities 146,988 209,449 165,930 202,194

Provisions 7,327 5,818 5,236 4,7 13

Total current liabilities 154,315 215,267 171,166 206,906

Non‐current liabilities 206,093 125,615 195,615 195,615

Total liabilities 360,407 340,882 366,782 402,522

Paid‐up capital 3,397 3,413 3,413 3,4 13

Reserves & surplus 271,879 288,528 286,347 281,411

Shareholders’ equity 279,297 293,963 292,187 287,737

Total equity & liabilities 639,704 634,845 658,969 690,259

Source: Company, PhillipCapital India Research Estimates

Cash Flow


Pre‐tax

profit

8,390

8,508 2,725 4,228

Depreciation 7,962 6,629 4,312 4,943

Chg in working capital ‐30,628 38,669 ‐29,684 36,585

Total tax paid ‐4,464 ‐2,778 ‐899 ‐1,395

Cash flow from operating activities ‐18,740 51,028 ‐23,545 44,361

Capital expenditure 6,867 18,414 ‐31,522 ‐31,522

Chg in investments ‐2,077 4,425 891 802

Cash flow from investing activities 5,418 26,492 ‐30,630 ‐30,719

Free cash flow ‐13,323 77,520 ‐54,175 13,642

Equity raised/(repaid) 20,677 175,541 ‐157,085 0

Debt raised/(repaid) 20,711 ‐76,863 70,000 0

Dividend (incl. tax) ‐5,640 ‐5,666 ‐5,666 ‐5,666

Other financing activities ‐19,343 ‐163,191 158,545 0

Cash flow from financing activities 16,702 ‐71,541 66,398 ‐4,961

Net chg in cash 3,379 5,979 12,223 8,681

Valuation Ratios & Per Share Data

FY13 F Y1 4 FY15E FY16E

Per Share data

EPS (INR) 4.5 5.8 1.2 1.8

Growth, % (37.9) 30.3 (79.7) 50.7

Book NAV/share (INR) 162.0 171.1 16 9. 8 166.9

Return ratios

Return on assets (%) 3.5 3.9 3.2 3.6

Return on equity (%) 2.8 3.4 0.7 1.1

Return on capital employed (%) 4.5 5.5 4.5 4.9

Turnover ratios

Asset turnover (x) 0.2 0.2 0.2 0.2

Sales/Total assets (x) 0.1 0.1 0.1 0.1

Sales/Net FA

(x)

0.3

0.3 0.3 0.3

Working capital/Sales (x) 2.4 1.7 2.2 1.5

Working capital days 864.6 633.1 81 7. 6 538.9

Liquidity ratios

Current ratio (x) 2.4 1.8 2.3 1.9

Quick ratio (x) 1.2 0.9 1.1 1.0

Interest cover (x) 0.8 0.7 0.8 0.9

Dividend cover (x) 1.1 1.5 0.3 0.4

Total debt/Equity (%) 90.1 56.8 77.9 82.8

Net debt/Equity (%) 83.4 48.4 65.3 67.7

Valuation

PER (x) 31.6 24.3 119.6 79.4

Price/Book (x) 0.9 0.8 0.8 0.9

EV/Net sales (x) 5.7 4.3 5.3 4.5

EV/EBITDA (x) 17.0 14.4 14.1 12.2

EV/EBIT (x) 17.0 14.4 14.1 12.2



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Recommendation History

N

(TP

279)

N

(TP

240)

N

(TP

213)

N (TP 246)

N

(TP

225)

B

(TP

218)

B

(TP

208)

B

(TP

208)

B

(TP

240)

B

(TP

240)

N

(TP

152)

0

50

100

150

200

250

300

350

1/3/2011 8/8/2011 3/16/2012 10/19/2012 5/29/2013 1/3/2014 8/12/2014

Source: PhillipCapital India Research



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Management

(91 22) 2300 2999

Kinshuk Bharti Tiwari (Head – Institutional Equity) (91 22) 6667 9946

(91 22) 6667 9735

Research

Engineering,

Capital

Goods Pharma

Dhawal Doshi (9122) 6667 9769 Ankur Sharma (9122) 6667 9759 Surya Patra (9122) 6667 9768

Priya Ranjan (9122) 6667 9965 Hrishikesh Bhagat (9122) 6667 9986

Retail, Real Estate

Infrastructure & IT Services Abhishek Ranganathan, CFA (9122) 6667 9952

Manish Agarwalla (9122) 6667 9962 Vibhor Singhal (9122) 6667 9949 Neha Garg (9122) 6667 9996

Pradeep Agrawal (9122) 6667 9953 Varun Vijayan (9122) 6667 9992

Paresh Jain (9122) 6667 9948 Technicals

Midcap Subodh Gupta, CMT (9122) 6667 9762

Consumer, Media, Telecom Vikram Suryavanshi (9122) 6667 9951

Naveen Kulkarni, CFA, FRM (9122) 6667 9947 Production Manager

Manish Pushkar, CFA (9122) 6667 9764 Metals Ganesh Deorukhkar (9122) 6667 9966

Dhawal Doshi (9122) 6667 9769

Cement Ankit Gor (9122) 6667 9987 Database Manager

Vaibhav Agarwal (9122) 6667 9967 Vishal Randive (9122) 6667 9944

Oil&Gas, Agri Inputs

Economics Gauri Anand (9122)

6667

9943 Sr.

Manager

–

Equities

SupportAnjali Verma (9122) 6667 9969 Deepak Pareek (9122) 6667 9950 Rosie Ferns (9122) 6667 9971

Sales & Distribution

Ashvin Patil (9122) 6667 9991 Sales Trader Zarine Damania (9122) 6667 9976

Shubhangi Agrawal (9122) 6667 9964 Dilesh Doshi (9122) 6667 9747

Kishor Binwal (9122) 6667 9989 Suniil Pandit (9122) 6667 9745

Sidharth Agrawal (9122) 6667 9934 Execution

Bhavin Shah (9122) 6667 9974 Mayur Shah (9122) 6667 9945

Corporate Communications

Vineet Bhatnagar (Managing Director)

Jignesh Shah (Head – Equity Derivatives)

Automobiles

Banking, NBFCs

Contact Information (Regional Member Companies)

SINGAPORE

Phillip Securities Pte Ltd

250 North Bridge Road, #06‐00 Raffles City Tower,

Singapore 179101

Tel

:

(65)

6533

6001

Fax:

(65)

6535

3834

www.phillip.com.sg

MALAYSIA

Phillip Capital Management Sdn Bhd

B‐3‐6 Block B Level 3, Megan Avenue II,

No. 12, Jalan Yap Kwan Seng, 50450 Kuala Lumpur

Tel

(60)

3

2162

8841

Fax

(60)

3

2166

5099

www.poems.com.my

HONG KONG

Phillip Securities (HK) Ltd

11/F United Centre 95 Queensway Hong Kong

Tel (852) 2277 6600 Fax: (852) 2868 5307

www.phillip.com.hk

JAPAN

Phillip Securities Japan, Ltd

4‐2 Nihonbashi Kabutocho, Chuo‐ku

Tokyo 103‐0026

Tel: (81) 3 3666 2101 Fax: (81) 3 3664 0141

www.phillip.co.jp

INDONESIA

PT Phillip Securities Indonesia

ANZ Tower Level 23B, Jl Jend Sudirman Kav 33A,

Jakarta 10220, Indonesia

Tel (62) 21 5790 0800 Fax: (62) 21 5790 0809

www.phillip.co.id

CHINA

Phillip Financial Advisory (Shanghai) Co. Ltd.

No 550 Yan An East Road, Ocean Tower Unit 2318

Shanghai 200 001

Tel (86) 21 5169 9200 Fax: (86) 21 6351 2940

www.phillip.com.cn

THAILAND

Phillip Securities (Thailand) Public Co. Ltd.

15th Floor, Vorawat Building, 849 Silom Road,

Silom, Bangrak, Bangkok 10500 Thailand

Tel (66) 2 2268 0999 Fax: (66) 2 2268 0921

www.phillip.co.th

FRANCE

King & Shaxson Capital Ltd.

3rd Floor, 35 Rue de la Bienfaisance

75008 Paris France

Tel (33) 1 4563 3100 Fax : (33) 1 4563 6017

www.kingandshaxson.com

UNITED KINGDOM

King & Shaxson Ltd.

6th Floor, Candlewick House, 120 Cannon Street

London, EC4N 6AS

Tel (44) 20 7929 5300 Fax: (44) 20 7283 6835

www.kingandshaxson.com

UNITED STATES

Phillip Futures Inc.

141 W

Jackson

Blvd

Ste

3050

The Chicago Board of Trade Building

Chicago, IL 60604 USA

Tel (1) 312 356 9000 Fax: (1) 312 356 9005

AUSTRALIA

PhillipCapital Australia

Level 37,

530

Collins

Street

Melbourne, Victoria 3000, Australia

Tel: (61) 3 9629 8380 Fax: (61) 3 9614 8309

www.phillipcapital.com.au

SRI LANKA

Asha Phillip Securities Limited

Level 4,

Millennium

House,

46/58

Navam

Mawatha,

Colombo 2, Sri Lanka

Tel: (94) 11 2429 100 Fax: (94) 11 2429 199

www.ashaphillip.net/home.htm

INDIA

PhillipCapital (India) Private Limited

No. 1, 18th Floor, Urmi Estate, 95 Ganpatrao Kadam Marg, Lower Parel West, Mumbai 400013

Tel: (9122) 2300 2999 Fax: (9122) 6667 9955 www.phillipcapital.in



Documents

Dlf Phillip Cap