DLF to invest Rs400 crore per quarter to buy land

DLF, the country’s largest realtor according to market capitalisation which had very few launches in the last two quarters, plans to launch a total 8 million square feet (msf) by the end of this fiscal, Saurabh Chawla, executive director-finance of the company told analysts on a conference call.

Though it is still awaiting a few regulatory approvals, the developer is hopeful of launching 5 msf of residential plotted township or developments in Gurgaon and near Chandigarh.

It will launch luxury housing project of 0.6 msf at Kochi, group housing project at Gurgaon of 1 msf, City Center Commercial project for 1 msf and commercial project at Delhi for 0.5 msf and a super luxury housing project of 0.3 msf.

Meanwhile, its ambitious NTC mill project in Mumbai is still awaiting approvals and detailed engineering and construction cost effects, and it would take minimum 6-9 months for the launch.

DLF which has mandatory debt repayments of Rs210 crore has spent Rs500 crore in the last quarter to buy land parcels in New Gurgaon and Greater Chandigarh area and for capex. The company intends to spend around Rs300-400 crore per quarter for the next few quarters for acquisition of land parcels. It has raised Rs400 crore through monetisation of
assets.

Chawla said, “We are acquiring land for the next decade. We sold land at New Gurgaon, Pune, Amritsar and other areas.”

DLF had earlier indicated that it would reduce its debt to equity ratio to 0.5 by the end of this fiscal, but it seems unlikely as it has raised debt of Rs2,046 crore, raising the ratio to 0.79. It had repayments of Rs1,668 crore by the end of the fourth quarter and after refinancing it is left with mandatory repayments of Rs210 crore by fiscal end.

The company’s debt cost has increased from 10.5% to 10.8% and has repaid Rs2,680 crore in the current fiscal till date.

Param Desai, research analyst with Angel Broking, said, “It is a very forward looking and positive estimate that they would be able to bring down the debt. Their debt to equity ratio is the highest in its peer group. It has launched only 1.8 msft in the last quarter and has given a guidance of 8 msf which means a minimum 5.5 msf has to be launched this quarter and approvals are not in place for most of the projects.”

“We expect volumes to remain subdued with higher interest rates and debt has gone up. Reducing it by fiscal 2012 looks very difficult and there is no near-term trigger for the stock. We have a neutral rating on the stock,” Desai said. 

DLF’s net revenue for the third quarter increased 22.4% to Rs2,480 crore on year and net profit fell 0.50% to Rs466 crore from the year-ago period.