DLF Company analysis

 

Industry Profile  The real estate sector is one of the most globally recognized sectors. In India, real estate is the second largest employer after agriculture and is slated to grow at 30 per cent over the next decade. The real estate sector comprises four sub sectors – housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

Indian Real estate Market is expected to reach US$ 180 billion. NCR & Mumbai are by far the biggest hospitality markets in India, followed by Bengaluru, Hyderabad & Chennai, besides hotels, the hospitality market comprises serviced apartments & convention centers. Few large developers with a pan-India presence dominate the market, operating model has shifted from sales to a lease & maintenance. Rapid growth in services sectors: IT/ITeS, BFSI & Telecom, Rising demand from MNCs, Demand for office space in Tier 2 cities. Mumbai, NCR & Bengaluru account for 60 per cent of total office space demand in India as of 2017, the office space absorption in 2016 across the top eight cities amounted to 34 million square feet (msf) with Bengaluru recording the highest net absorption during the year, business activity shifting from CBDs to SBDs, Tier 1 to Tier 2 cities. India’s rank in the Global House Price Index has jumped 13* spots to reach the ninth position among 55 international markets, on the back of increasing prices in mainstream residential sector.

Fundraising and investments in India’s office space sector, which have already reached more than US$ 2 billion in 2017, are poised to rise higher with further foreign investment of US$ 1.4 billion expected, as local developers and foreign investors expand their portfolios through fresh investments, acquisitions or launch of Real Estate Investment Trusts (REITs) to build and acquire office assets.

Company profile  :  DLF is India’s largest Commercial Real estate developer company. It is based in Delhi and  It was founded by Chaudhary Raghvendra Singh in 1946.  Together with its subsidiaries, joint ventures and associates the group is primarily in the business of real estate development.

The company has a unique business model with earnings arising from development and rentals. The development business includes home and commercial real estate. The Homes business caters to 3 segments of the residential market – Super Luxury, Luxury and Premium. The product offering involves a wide range of products including condominiums, duplexes, row houses and apartments of varying sizes.

The annuity business consists of the rental businesses of offices and retail. This business having potential for REIT. Company is holding Some large office space at prime location.

Shareholding Pattern  26 promoter entities holding 74.95%. Mutual Funds holding 1%. Financial institutions hold 0.15%. o.14% held by insurance companies. 16.67% held by foreign investors. Remaining around 7% held by Public.

Financials and Ratios  :  

 2010 - 112011 - 122012 - 132013 - 142014 - 152015 - 162016 - 17
Revenue4,158.764,582.673,304.843,825.884,061.883,572.594,405.31
Net profit1,269.581,041.79501.56526.84940.08974.56596.56
NPM30.52%22.73%15.17%13.77%23.14%27.27%13.54%
EPS7.466.122.952.975.275.463.34
Book Value81.3585.3586.0393.4396.69100.0782.42
Dividend per Share2222222
Dividend payout26.7432.6070.9667.6237.9136.60
ROE9.197.183.433.165.455.454.05
ROCE4.774.092.082.133.563.853.03
ROA3.652.881.351.402.612.892.06
Asset Turn over8.389.675.816.348.387.2712.80
Debt to Equity0.970.830.760.580.610.470.53

Future Prospectus  :  The Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform which will help in allowing all kinds of investors to invest in the Indian real estate market. It would create an opportunity worth Rs 1.25 trillion (US$ ) in the Indian market over the years. DLF Being one of the Largest player in market is well placed for this.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter