On Monday, DLF Ltd. (DLFU:IN) received an upgrade in stock rating from an 'Add' to a 'Buy' by Kotak, with a maintained price target of INR960.00. Despite DLF's second quarter financial year 2025 (2QFY25) pre-sales being notably weak at Rs6.9 billion, which is considered one of the poorest performances in recent years, the company's management remains confident.
They attribute the poor performance to delays in approvals but maintain a pre-sales forecast of Rs170 billion for the fiscal year 2025 (FY2025), bolstered by Rs410 billion worth of new project launches.
DLF's management has highlighted the strong response to its upcoming super-luxury project, The Dahlias, which is expected to launch in the third quarter of FY2025 following the receipt of RERA approval. Additional launches in Mumbai, Goa, and a new phase of Privana are planned for the fourth quarter of FY2025.
DLF's commercial arm, DCCDL, reported a high occupancy rate of 93% and continues to show double-digit profit after tax (PAT) growth. The company is also set to commission incremental assets of 3.1 million square feet, 94% of which is already pre-leased, over the next 12 to 18 months.
The analyst acknowledged the disappointing pre-sales for the quarter but expressed belief in DLF's ability to leverage the housing demand through its robust pipeline of launches, which is valued at Rs635 billion beyond FY2025. This optimistic outlook on the company's future prospects and strong launch pipeline has led to the upgrade in the stock's rating to 'Buy', with the fair value (FV) estimate remaining at Rs960.
InvestingPro Insights
Adding to the optimistic outlook on DLF Ltd., recent data from InvestingPro provides further context to the company's financial position and market performance. Despite the weak pre-sales in Q2 FY2025, DLF's revenue growth remains strong, with a 22.23% increase over the last twelve months and an impressive 46.55% growth in the most recent quarter. This aligns with the management's confidence in meeting their pre-sales forecast for FY2025.
The company's profitability also appears solid, with a gross profit margin of 53.28% and an operating income margin of 26.4% over the last twelve months. These figures suggest that DLF maintains efficient operations despite market challenges.
InvestingPro Tips highlight that DLF has raised its dividend for 3 consecutive years and has maintained dividend payments for 18 consecutive years. This consistent dividend policy may appeal to income-focused investors, although the current dividend yield stands at a modest 0.64%.
While the stock has experienced a significant drop of 9.73% in the past week and 14.99% over the last month, it's worth noting that DLF has delivered a strong 45.75% return over the past year. This volatility could present opportunities for investors who share the analyst's bullish outlook.
For those seeking a more comprehensive analysis, InvestingPro offers 16 additional tips on DLF, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.