DLF promoters buy 23 lakh shares, increase stake to 74.99 percent stocks soars 9 percent in trade

Realty major DLF’s promoters have bought 23 lakh shares of the company through open market transactions for nearly Rs 25 crores, raising their stakes to 74.99 per cent.The 23 lakh shares were purchased between November 23rd & 24th from open market, the country’s largest real estate company said in a regulatory filing.Post this transaction, the stake of the promoters, KP Singh and family, have increased from 74.99 per cent to 74.86 per cent it held earlier in the firm, a change of 0.13 percent.

The promoters’ stake means the number of shares held by the promoters out of the total number of shares in the company. The increase in promoters stake is perceived as 'positive.' They are doing so as they have high confidence in the business and feel that the stock is significantly undervalued at the current levels. The DLF promoters increasing stake is perceived as a particularly positive development as it shows their renewed commitment, faith and confidence in the business amidst many regulatory overhangs.

Promoters are generally the biggest shareholders in their companies. They are also the most informed on the company's prospects, having all the information about the company. If still they are investing, it shows that they have confidence about its prospects and believe that investing in the company is better than putting money somewhere else as it would give better returns. Increase in promoters holding in companies indicate not only the confidence in the future earnings potential of the company but also the value that it will create for the shareholders in the long-term.

Reacting to this positive development the stock gained 9 percent in trade to touch an intra-day high of Rs 116.45. Of late the share has been reeling under pressure due to the weak business environment plus the regulatory concerns related to the company. But with recent developments plus indications of stake sales in the rental arm DLF Cyber City Developers Ltd by the end of the fiscal, augers well for the company. The money raised would help the company in paring down its debt significantly and improve its finances.

DLF reported a decent set of Q2 numbers even after a slightly sales numbers mainly aided by a dip in the input costs. The net sales declined by 7.33 percent Y-O-Y from Rs 2,013.15 crore to Rs 1865.49 crore. But the surprise was on the EBITDA front as it increased by a strong 18 percent aided by decline in expenses. The PAT grew by 21 percent from Rs 109.06 crore to Rs 131.5 crores Y-O-Y.