DLF Stock Poised for 65% Surge as Brokerage Initiates Buy

REAL-ESTATE
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AuthorIshaan Verma|Published at:
DLF Stock Poised for 65% Surge as Brokerage Initiates Buy
Overview

Brokerage Motilal Oswal Financial Services sees a 65% upside for real estate major DLF Ltd., setting a price target of ₹974. The firm initiated a "buy" rating, citing DLF's substantial land bank and the strong sales potential of its 'The Dahlias' project, even as Q3 bookings fell sharply due to redesign pauses. Strong collections and zero gross debt underscore improving financial health.

The brokerage's optimistic outlook comes despite DLF reporting a significant 97% year-on-year drop in quarterly bookings to ₹400 crore. This sharp decline was largely attributed to a temporary halt in sales for its super-luxury residential project, 'The Dahlias', which required design modifications to comply with updated safety and building codes.

Project Dahlias and Sales Resumption

Management confirmed that over 55% to 60% of 'The Dahlias' inventory was sold even before its formal launch. Bookings were temporarily paused in the third quarter for redesign, but approvals were received in early January, allowing sales to resume. Despite marginal cost increases, the company stated that margins remain intact.

Financial Strength and Land Bank

Motilal Oswal assumes a 12 to 13-year monetization timeline for DLF's remaining 150 million square feet of land bank, which they believe adequately incorporates growth visibility. The firm's Q3 collections increased by 52% year-on-year to ₹4,800 crore, exceeding estimates. This robust collection translated into operating cash flow rising 2.2 times annually to ₹4,020 crore, culminating in the achievement of zero gross debt.

Valuation Metrics

DLF's business is valued at ₹1.68 lakh crore, with its land contributing ₹1.22 lakh crore. DLF Cyber City Developers Ltd (DCCDL) is valued at ₹70,800 crore. Considering estimated net cash of ₹2,000 crore for FY26, the revised Net Asset Value (NAV) stands at ₹2.41 lakh crore. Of 25 analysts covering the stock, 23 recommend a "buy" rating, with two holding.

DLF shares ended the previous session up 4.1% at ₹588, though the stock has declined 14.6% in the past month and 25.3% over the last six months. The projected upside by Motilal Oswal suggests a potential re-rating if the company executes on its development pipeline and monetizes its land assets effectively.

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