DLF’s business recovers, debt concerns recede
DLF, India’s largest real estate developer, is recovering after concerns over its huge debt of Rs 23,000 crore last year and lack of new launches. Last year, its realty index had fallen by 30 percent, where as, in the last three months, DLF stock had risen by 32 percent.
The realty giant’s debt is expected to lessen to 18,500 crore by March end 2013, after selling of its few assets, namely Aman Resorts, luxury hotel chain for RS. 1650 crore, NTC mill land in Mumbai for Rs. 2727 crore and a part of its wind power business for Rs. 282 crore.
The debt will further reduce to Rs. 16,500 crore, after they sell 4.7 percent of their stake to retain with Sebi’s listing norms by this year.
A real estate analyst said that the debt has drastically reduced after the sale of Aman Resorts, 150 MW of wind power and NTC mill land, and it has helped the firm to get rid from the onus of interest.
The launch of phase-2 of Magnolias and Park Place is expected to increase the speed of cash flow to the firm.
The heavy debt and lack of new project launches have affected the stock as well. The stock points have reduced from a high of Rs. 519 in October 2009 to a low of Rs. 174 in January 2012.
The net profit of DLF has reduced by 62.8 percent in the quarter of July-September 2012, which was their ninth consecutive quarter in the decline of their profits. Their net profit was Rs. 138.51 crore which fell from 372.41 crore a year ago. This was resulted because of slow sales and high finance cost.
Competition Commission of India (CCI) had imposed a Rs. 630 crore penalty on the company in August 2011, as they found DLF guilty for misusing the position of being a leader in the market of Gurgaon.
During month of May last year, Veritas, a Canada based independent equity research firm has pointed out that DLF’s share was just Rs. 100 each, while that was the ‘best case scenario’ situation. They also questioned the company’s book equity and asset base.
Last year, Arvind Kejriwal, an anti-corruption activist blamed that Robert Vadra of having secret dealing with DLF. He even accused Haryana government as DLF’s agent.
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