DLF reported FY2009 net income of Rs46.3 bn, which was down 41% yoy, and 7% below street estimates. EBITDA margin for FY2009 was down to 60% from 69% in FY08. reflecting a fall in DLF Assets Limited (DAL) margins. Profit-before-tax margin for DAL stood at 57% for FY09 compared with 72% in FY08. In 4QFY2009, DLF took a one time charge of Rs3 bn on account of price resets and various customer schemes.
DLF’s EPS for FY-09 was Rs 27.17 42% lower than Rs 46.90 reported in FY-08.
DLF stock is up 31% in the past month vs. the Sensex up 15%, while results indicate that the backdrop remains challenging. DLF has indicated that it will focus on affordable housing, which we believe is the right strategy in the current difficult environment. The stock may remain on the sidelines until management is able to lower obligations to DAL [Promoters privately Held Company]related debtors (DAL owes about Rs49 bn to DLF as at March 31 2009). Although the response to some middle income housing launches has been encouraging, margins are lower and commercial lease volumes remain negligible.
DLF has withdrawn from 326mn sq ft of land resources, which includes Dankuni and Bidadi townships. DLF has also suspended its over hyped share buy back program.
DLF is expected to Report an EPS between Rs 16 to Rs 24 according to various estimates [Goldman Sachs – Rs 15, Kotak Rs 19 and Citi Rs 24] NAV / Share is expected to be Rs 260.