DLF Ltd. is likely to turn cash-flow positive in financial year 2018-19, as its large residential projects are completing soon and anticipated reduction in net debt, according to a research report by brokerage CLSA.
The real estate developer signed an agreement on Saturday, with Reco Diamond, an affiliate of GIC Real Estate, Singapore, to sell stake in its rental unit DLF Cyber City Developers Ltd. (DCCDL).
The broking firm expects that after DCCDL’s sale to GIC, DLF should be left with about Rs 6,000 crore in net-debt, compared to Rs 20,000 crore at present.
The debt reduction is much needed as a combination of high debt burden and weak Gurgaon residential market had led to net debt rising Rs 3,800 crore since June 2016.CLSA Research Report
The broking firm maintained its ‘Sell’ rating on DLF stock and kept its target price unchanged at Rs 139 as the valuations of DCCDL remain in line with estimates. However, it might raise its earnings per share estimates by 5-10 percent post-equity infusion, the report said.
Shares of the country’s largest real estate company retreated 1.2 percent to Rs 184 after gaining nearly 3 percent in opening trade. The stock had risen 6.2 percent in the previous two sessions. It has returned over 66 percent so far this year, in line with the S&P BSE Realty Index.
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