Some Positives In DLF’s Q1 Numbers

DLF announced its June 2013 quarter results on August 12, wherein its financial performance has been in line with the street estimates. The consolidated topline of the company came in at Rs 2314.08 crore and the bottomline stood at Rs 181.19 crore as against Rs 2197.71 crore and Rs 292.79 crore respectively in the June 2012 quarter.

Though the results may not look that good at the superficial level, certain positives emerging from the results have kept the share trading strong. First and the foremost is the good response to the much awaited launches of DLF 5 (‘The Crest’) in Gurgaon, wherein an area of 0.83 million square feet was sold at an average price of Rs 17500 per square feet. With this, the average realisation for the June 2013 quarter increased to Rs 13425 per square feet from the levels of Rs 6231 crore in June 2012.In addition, the management has stated that the net debt levels have declined in the June quarter. The net debt levels as on June 30, 2013 stood at Rs 20369 crore, marking a significant decline from the levels of Rs 21731 crore seen in March 2013. This was following a Rs 1863 crore institutional private placement done by the company.

Considering these factors, the stock has managed to witness some recovery on the bourses today. However, we feel the realty sector is not yet out of the woods. In fact, the tightened liquidity situation by the apex bank will play spoilsport going ahead. We feel that it would be better for investors to stay away from the sector in general and this scrip in particular.