DLF targets ~25 billion sales in 2018-19

Banking on its ~140 billion ready-to-move-in inventory, the country’s largest real estate developer, DLF, on Tuesday said it was looking to more than double its sales bookings to ~25 billion during the current financial year.

The company has also set a deadline of next March to be debt-free.

The K P Singh-led company is also working on a few new projects in both the commercial and residential segment. While DLF’s net sales bookings stood at around ~9.50 billion in 201617 (it had suspended sales during the MayOctober 2017 period to comply with the Real Estate Regulatory Authority or RERA), it said a large chunk of those sales came from the rest of India, excluding Gurgaon.

In an analysts’ call, DLF Group Chief Financial Officer Saurabh Chawla provided a sales bookings guidance of ~20 billion to ~25 billion for 2018-19. The figure is likely to be revised if housing demand improves.

The value of unsold inventories declined to ~140 billion from ~150 billion. Chawla said DLF had a net debt of ~6.2 billion at the end of 2017-18.

DLF expects to be debt free by next March, aided by a capital infusion of ~2.25 billion by the promoters and the proposed sale of over 170 million shares to institutional investors through qualified institutional placement (QIP).

DLF had earlier planned a QIP in June to raise ~4 billion to ~4.5 billion, sources said.

“The target is to achieve zero net debt by March 31, 2019, from ~6.2 billion as of March 31, 2018. The company is expected to achieve zero net debt by capital actions, QIP of about 173 million shares and residual inflow from promoters of ~2.25 billion,” the company said in the presentation.

The company has got into a buildto-sales cycle of three to four years, where it sells down completed inventory while building new inventory.

The company said commercial projects would be sold to either retail customers (B2C) or to DLF Cyber City Developers Ltd (DCCDL) as investment properties (B2B business model). “Additional interest costs during construction is expected to be very marginal and can get absorbed in higher realisations from the sale of completed property and timely completion of projects,” it said in the presentation. DCCDL will act as a ‘private’ REIT – it will build its own investment properties of around 19 million square feet.

With the development of the embedded land bank, contractual growth of rentals and rent reversions, and transfer of assets, the earnings before interest, taxes, depreciation and amortisation (Ebitda) of DCCDL is expected to grow in the healthy double digits during the next 10 years.

DLF promoters sold a 40 per cent stake in DCCDL for nearly ~120 billion. The deal included sale of a 33.33 per cent stake to GIC for about ~9 billion. After this deal, DLF’s stake in DCCDL rose to 66.66 per cent from 60 per cent.

In an analysts’ call, DLF Group CFO Saurabh Chawla provided a sales bookings guidance of ~20-25 bn for 2018-19