DLF: Good days ahead ?

Technically, DLF (CMP:159) has to sustain over 167-171 zone for immediate target of 180 area. Consecutive closing above 180, it may invite 191-205 & 220-240 zone in the short to medium term and in the long term, it could even scale to 305-402 territory (FY-18; provided it clears all its present regulatory & legal hurdles & technically sustain over 240 zone).

On the flip side, immediate support is 156, followed by 151-145 zone. Sustain below 145, it could fall to 139 zone, which may be a strong positional support as of now. It gave a smart recovery from 100 area in mid-Oct'14 to 180 odd levels in Feb'15, which indicates that worst may be behind of DLF for the time being.

As par CRISIL report, published yesterday, DLF has potential to cut its massive balance sheet debt of around 20300 cr to 17500 by FY-16 as the company has options to raise funds through various routes after SAT order last month, quashing SEBI ban on it for 3 years to utilize capital market. Although , on account of weak operating cash flow and  various pending regulatory & legal issues, its long term debt facilities outlook is kept at negative.

DLF is the largest real estate firm of our country with considerable vast unutilized land banks and under utilized real estate projects/assets. Its also actively considering various options to de-leverage such assets to trim its massive debt. But its high acquiring cost of land banks may be an issue.

In the coming days, all eyes will be on the out come of its CCI case (massive penalty of  around 6300 cr), pending at SC and various other regulatory issues.

Going ahead, DLF may also be one of the major beneficiary of expected infrastructure push, lower interest rates environment & regulatory improvement in India, thanks to the recent Real Estate Bill.

As par BG metrics of TF model, median valuation of DLF is around 152, considering its present TTM EPS of around 4.83. But if we assume projected FWD EPS of around 7.50 (FY-17), the median valuation of  DLF is around 190 under the current market conditions.

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	LONG TERM	SHORT TERM	MEDIAN VALUE	200-DEMA	10-DEMA
DLF	4.83	153.74	30.05	152.00	152.75	152.38	159.19	160.75

DLF

7.5

153.74

30.05

189.41

190.34

189.88

159.19

160.75