Some respite: DLF shares up 1% as co on track to cut debt

DLF, the country’s largest listed real estate company that has been in the news for all wrong reasons in the last few weeks, has finally got some relief on the debt front. It has managed to reduce its debt to around Rs 21,200 crore as of end October.

Shares of DLF rose 1.4 percent after the company told analysts in a conference call that it is on track to reduce debt to around Rs 15,000 crore.

The company’s total debt as of end October stood at Rs 21,200 crore, after taking into account the cash flow from NTC mill land deal with Lodha Developers, media reports said. The company had sold the 17 acre plot for Rs 2,727 crore, which was seen a distress sale. (Read DLF’s Worli realty deal looks like a distress sale here .)

[caption id=“attachment_524813” align=“alignleft” width=“380”] The company has been trying to sell its non-core assets in its bid to cut debt. Reuters[/caption]

The company has been trying to sell its non-core assets in its bid to cut debt. It expects to announce in the next two weeks a deal to sell Aman Resorts to raise Rs 1,700-2,000 crore. Another deal to sell its wind power business is expected in two months, the company has said.

The deal is likely to raise Rs 800-1,000 crore. “Aman is now reaching its closure point in the next few weeks itself and we hope the financial closure can happen by January,” Saurabh Chawla, executive director, finance at DLF, was quoted as saying in a report in the Economic Times.

Once these deals are through the company will see its net debt falling to about Rs 18,000 crore. DLF is also planning to reduce promoters stake to 75 percent through issue of fresh equity, PTI reported.

“In the medium term, (this will) further pare down the net debt to below Rs 15,000 crore with operational cash flow surpluses and equity issuance to bring the free float to 25 percent (in compliance to current regulations) during FY14,” DLF was quoted as saying in the report.

Chawla said there would be a capital market transaction next year leading to dilution of promoters’ stake in the company, according to the report. As on September 30, promoters and their group companies held 78.58 percent stake in the company.

As per the SEBI guidelines, private companies should have a minimum public shareholding of 25 percent by June 2013. The two big-ticket sale of non-core assets, surplus cash flow and capital market transaction will help the company pare its debt to Rs 15,000 crore, Chawla said.

Brokerage KimEng today said it expected DLF’s second half profit to form 70 percent of full?year EPS of Rs 1,770 crore. “This will be on the back of: 1) profit of Rs10bn from sale of Mumbai land in Q3, 2) presales growth of 20 percent in last 1 yr and, 3) current value of customers’ orders worth Rs 5600 crore, which is equivalent to 3x H2 revenue,” it said. This will help the company grow profit 45 percent in FY13.

In FY14, the earnings will further increase 17 percent because of expected recovery in presales following reduction in home loan rates, it said.

PTI