Stock falls 28%, DLF may have to lower prices

NEW DELHI: DLF’S shares tanked more than 28% on Tuesday, a day after the market regulator barred India’s biggest realtor from selling shares for three years, triggering concerns about its ability to fund projects and repay loans.

Analysts said the Securities and Exchange Board of India’s (SEBI’S) Monday ruling could force DLF to lower property prices, leading to an overall correction in the National Capital Region, given the company’s market leadership in the region, analysts said.

“We expect this capital-market ban to result in a meaningful price correction as DLF liquidates unsold inventory in its completed projects to generate operating cash flows,” Ambit, a brokerage firm, said in a research report. The company, credited with building Gurgaon, commands nearly 60% market share in the glitzy Millennium City that borders the Capital.

“If it ends up selling land and development projects and ongoing projects at a discounted rate, it will have an impact on the overall real estate-market sentiment,” said a real estate consultant, who did not wish to be identified.

“DLF’S inability to access capital markets could impact its fund-raising programme,” Macquarie research said. “DLF, in this case, would have to resort to large asset sales to reduce debt in the future.”