DLF stock may give over 25% returnin next one year

India continues to be a preferred destination for global investors supported by competitive wage and occupancy costs along with availability of relevant talent pool. The real estate sector in India has clocked record registered sales in the residential segment despite rising interest rates on the back of increase in repo rates. Creditable brands like DLF have continued to gain huge market share with a continued presence in the large premium and luxury home segment. DLF is in the real estate business of residential, office, retail, facility management and hospitality segments with an impeccable track record for the last 75 years. DLF posted record performance for Q4FY23 with record sales of Rs 8,458 crore, record collections at Rs 1,929 crore with record surplus cash flow of Rs 1369 crore. The net debt levels of the company dropped to Rs 721 crore during Q4FY23 which is the lowest in the last few years and it is also aiming to achieve the goal of being Net Debt Zero in FY2024. DLF posted excellent consolidated financial results for Q4FY23 with revenue at Rs 1,576 crore and profit after tax at Rs 581 crore. The company had an overwhelming response for its luxury offering The Arbour Gurugram in FY23 with a record breaking response of over billion dollar sale having sold out the project in the pre-launch phase itself. The real estate sector in India is the single-largest employer in the country and is expected to contribute substantially to India’s GDP in the next few years. The Indian real estate sector comprises of four main segments: housing, retail, hospitality, commercial, and a fifth growing sub-sector, viz. warehousing. Within real estate, two distinct growth trends are also visible, namely affordable housing, which is supported by government subsidies and interest rate subventions. Apart from the significant growth in co-working spaces, the changing perception of real estate is also driving the market for niche residential segments such as co-living, senior living and student housing. The government has also taken several initiatives to encourage the development of the real estate sector. DLF is also seeing good demand for office space on the back of significant growth in demand for office space from the IT/ITES sector. Furthermore, Real Estate Investment Trust or REIT is expected to facilitate further investments in the Indian real estate market. Herein, DLF is also planning to come up its own REIT offering in the near future. The company has identified plans for development of new product offerings and margin accretive products. Tapping of multiple new geographies across Gurugram / Delhi NCR and Chennai, Chandigarh and Goa could also be hugely profitable opportunities for the company. Real estate companies have seen their stocks doing fantastically well in the last one year, including real estate giant DLF Ltd. The company has an excellent land bank and is exploring opportunities to encash and develop them in the right time and hence the company has adopted a calibrated approach towards strong business growth wherein all levers are well poised for future growth momentum. Backed by positive fundamentals and better demand projections, DLF Ltd stock is poised for sustainable growth trajectory over the next few years. Fund managers and analysts and portfolio investors are quite bullish on the DLF stock currently quoting at Rs 500 to appreciate by over 25% in the next one year time horizon.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.