Wednesday, February 18, 2009

DLF (DLF.BO):The road less travelled; maintain Sell(GS)

What's changed :

DLF’s below consensus 3QFY2009 results (announced on January 31) confirmed a significant slowdown in property sales and construction activity in India. As a result, we push back our medium-term development pipeline projections and lower our property price assumptions. We lower our FY2009E-FY2011E EPS by 29%-62% and cut our 12-month target price to Rs124 from Rs203. We believe the recent strength in the share price, up about 20% from its recent trough post weak 3Q numbers, presents a profit taking opportunity. We maintain Sell on DLF and our cautious stance on the India real estate sector.


DLF registered four years of strong profit growth since 2004. However, we believe the company may need to realign its offerings to navigate through the current property downturn. DLF has stated that it will look to launch middle-income housing projects at lower ticket sizes. With interest rates also trending lower, we believe this strategy could revive volumes.However, we expect to see few signs of a recovery till 2HCY2009 and believe the stock would be on the sidelines in the interim

Read Full report here (DLF:Goldman)