DLF to sell stake in rental arm

According to a media report, India’s most valuable property developer DLF has initiated the process of a sell out of 40 per cent stake in its rental arm DLF Cyber City Developers (DCCDL), by promoters. The move is to pare the debt. The realty firm would continue to own remaining 60 per cent stake in DCCDL.

In October last year DLF has announced that its promoters will sell their stake in the DCCDL which holds the bulk of office and retail complexes. The deal which is estimated to be around Rs 12000-14000 crores will help DLF to achieve three of its main objectives - removal of conflict of interest; creation of a rental platform with large financial investors; and reducing substantial portion of debt.

DLF Cyber City Developers Ltd (DCCDL) has about 25-26 million sq ft of leased commercial space with an annual rental income of about Rs 2,250 crore. DCCDL also has 20 million square feet of future development potential. Blackstone, Singapore's sovereign wealth fund GIC, Canada Pension Plan Investment Board in Brookfield, Abu Dhabi Investment Authority and Qatar Investment Authority are among the prospective buyers the media report said.

On financial front, the consolidated net revenue from operation of DLF for Q3FY16 stood at 2828 crores compared to Rs 1957 crores in Q3FY15, an increase of 44.51 per cent year on year (YoY). EBITDA stands at Rs 1379 crores this quarter compared to Rs 918 crores for the same period last year, an increase of 50.14 per cent YoY. EBITDA margin stands at 48.75 per cent this quarter compared to 46.93 per cent in Q3FY15. The Net Profit of company stands at Rs 164 crores compared to Rs 132 crores, an increase of 24.40 per cent YoY. The interest paid by the company stands at Rs 672 crores in Q3FY16 compared to Rs 648 crores in Q3FY15, an increase of 3.72 per cent YoY. The interest burden stands at 23.78 per cent this quarter compared to 33.13 per cent for the same period last year.

On valuation front, the stock of company is trading at trailing twelve months P/E of 35.89 compared to industry P/E of 23. The stock of company is trading at Rs 121.50, an increase of 2.57 per cent from previous close.