Corporate Feb 19, 2013
Realty major DLF aims to cut its net debt by half over the next three years to Rs 10,000-11,000 crore with the help of fresh issue of equity shares, sale of non-core assets and improved cash flows.
The company's top executives met analysts on Friday and spelled out a plan to reduce the debt by half from the current Rs 21,350 crore.
DLF's share price bounced back by rising over 5 percent on BSE to close at Rs 261.45 after witnessing sharp losses in the previous four sessions.
In order to meet the market regulator SEBI guidelines of minimum 25 percent public shareholding by June 2013, DLF is planning to dilute promoter stake by issuing fresh equity
shares in first quarter of next fiscal helping the company to raise over Rs 2,000 crore.
The company is also expecting to raise another Rs 2,500 crore after conclusion of its divestment of hospitality chain Amanresort and part of wind energy business in this quarter.
In December 2012, DLF announced sale of Amanresorts back to founder Adrian Zecha for about Rs 1,650 crore.
Last month, the company announced sale of part of its wind turbine business in Gujarat to Bharat Light & Power for Rs 282.3 crore. That apart, DLF is also in negotiations for sale of its
wind turbines in Rajasthan (34 MW), Tamil Nadu (33 MW) and Karnataka (11 MW).
DLF has been selling its non-core assets and businesses since last couple of years to focus on real estate and cut its huge debt.
Country's largest real estate developer has reduced its debt by Rs 1,870 crore during the third quarter of this fiscal to Rs 21,350 crore with the help of proceeds from 17-acre
prime land in Mumbai to Lodha Developers for Rs 2,727 crore. The debt is expected to come down at Rs 19,000 crore by end of this fiscal, DLF said in a presentation.
DLF posted 10.23 per cent rise in consolidated net profit at Rs 284.80 crore for the quarter ended December 31, 2012 compared to Rs 258.35 crore in the year-ago period. Income from operations, however, declined to Rs 1,310.04 crore in the third quarter, compared to Rs 2,034.37 crore in the same period of 2011-12
Brokerages too were bullish on the stock and seemed convinced with the company's debt reduction plan.
CLSA upgraded realty major to 'outperform' from 'sell' earlier citing debt reduction plan to boost earnings in near future.CLSA believes that the company is set to reverse the declining earnings after 5 years. DLF is expecting 40 per cent earning CAGR over the next 2 years. CLSA says near prospects of further debt reduction due to equity raising are also positive.
In the past two years, DLF's stock has been under pressure due to poor financial health. With improving balance sheet, research firm Kim Eng expects the stock to re-rate.
The concerns over the company's debt and lack of new launches had pulled the stock down from a high of Rs 519 in October 2009 to a low of Rs 174 in January 2012. However, the stock ended the year with gains of nearly 26 percent on the BSE.
Research firm Kum Eng expects the fourth quarter recurring profit of Rs 200 crore compared to a loss of Rs 210 crore in 3Q as there will be no further provision for losses and cost adjustments.
With PTI inputs