This Real Estate Stock Has 32% Upside In 1-Year, Says Emkay Global

Brokerage firm, Emkay Global is bullish on the stock of real estate player DLF and has set a price target of Rs 530 on the stock, as against the current market price of Rs 402. The brokerage sees several positives from the guidance.

Guidance shows sales momentum

According to Emkay Global, the FY22 presales guidance is revised to Rs 65 billion as DLF sees the Q3 sales momentum sustaining in Q4.

"Notably the company aims to sustain a similar quarterly run-rate of Rs 20-25bn ahead owing to the strong launch pipeline and majority land reserves monetization ready. Quarterly surplus cash generation pegged at Rs 5 billion is conservative given the fast churning ready inventory and strong traction in new launches. The pricing environment remains buoyant and the developer plans to raise subsequent launch pricing in Midtown Delhi project by Rs 2-3k/sf. Notably, nearly all of the value increase in the med-term launch pipeline is attributable to higher pricing," the brokerage has said.

Good sales performance

According to Emkay Global, Q3 witnessed a healthy mix of all categories contributing to sales. Independent unit launches and Delhi launch each accounted for Rs7bn in sales. "In its uber luxury project - Camellias, DLF retained its normalized quarterly sales run-rate of 19-20 units amounting to a sales of Rs 6bn. More importantly, it is worth noting that these record sales numbers are despite the backdrop of higher pricing, thus, reflecting strongly on the underlying demand prevailing in the Delhi/Gurgaon market," the brokerage has said.

Retain buy rating on the stock

Current market price	Target price
Rs 404	Rs 530

We retain DLF as our top real estate play on identified launch pipeline of >35msf having a diversified product mix is set to drive record sales over the next 12-18 months.

"The strong response to new launches (Delhi launch achieving Rs15bn sales in first 3-4 weeks of launch while >90% sales to launch in independent units) underpins our view and sizeable land reserves (>150msf) in core markets which are outperforming other Tier 1 cities and have witnessed highest consolidation," the brokerage has said.

The stock of DLF was last seen trading at Rs 401.85.

Disclaimer:

Investing in equities is risky and investors must therefore understand the risk. The author and Greynium Information Technologies Pvt Ltd would not be responsible for any losses caused based on the article. The author and his family do not hold shares of DLF Ltd. Investors should exercise caution on account of heightened volatility in the markets currently.