DLF Q2 net profit more than halves, says worst is behind it

DLF Ltd, which has managed to reduce its debt thanks to a big- ticket Mumbai land sale deal with Lodha Developers, says the worst is behind it and the company is on track to reduce debt with more asset sales. The country's largest realtor by market capitalisation also plans to step up project launches in the six months ending March 2013.

DLF managed to offload its NTC Mumbai property to Lodha developers for Rs 2,727 crore a couple of weeks ago, which brought down its net debt to Rs 21,220 crore as on date as compared to Rs 23,220 crore as of September 30, 2012. The company's net debt had increased from Rs 22,680 crore as of June 30.

DLF said it is confident of achieving net debt of Rs 18,500 crore by March 2013.

In an investor presentation, DLF said against a target of Rs 5,000 crore it has closed divestments of Rs 3,129 crore. The sale of NTC Mumbai land to Lodha would reflect in Q3 FY13 numbers.

The firm added it is in advanced stage of negotiation and documentation on Aman Resorts transaction and has got approval of the shareholders in place for Wind Energy transactions, which again is in an advance stage. The Aman Resorts deal is expected to be executed in the current quarter while the wind energy business is projected to be sold by March.

"Proceeds to be utilised primarily for debt reduction," according to DLF.

Talks are also on with other parties for miscellaneous transactions worth Rs 500 crore and it is expecting closure of these transactions by end of FY13.

It is also looking to further pare down the debt to Rs 15,000 crore in the medium term with operational cash flow surpluses and equity issuance to bring the free float to 25 per cent during FY14.

Also, after a long hiatus, the developer is finally looking to undertake big ticket launches for the second half of this financial year. It plans to launch projects in excess of nine million square feet in H2FY13 and it is also looking at a delivery schedule of 15 million square feet in the same period.

It clocked gross sales of 1.59 million square feet in Q2FY13 as compared to 1.28 million square feet in the same period last year. From a rental perspective, it clocked 0.24 million square feet of leasing in Q2FY13 vs 0.29 million square feet in Q1FY13 and 0.21 million square feet in Q2 FY12.

Even though it booked more sales, its sales including other income stood at Rs 2,157 crore as compared to Rs 2,329 crore in the first quarter ended June 30. While sale dipped seven per cent sequentially, it dropped 16 per cent over the corresponding quarter last year.

Its net profit more has halved both sequentially and over the year ago period to Rs 139 crore. DLF's EBITDA margins stood at 40 per cent in Q2FY13 as compared to 51 per cent for the same period last year.

"All headwinds in the form of escalated interest costs, cost inflations and scarcity of labour (delayed execution) behind us. Launch (of) ‘high impact’ projects in H2FY13 may have slight/positive impact on the financials of the FY13, but will give high degree of visibility of cash flows and earnings over the next 3-4 years," the company said.

(Edited by Prem Udayabhanu)

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