Nomura has maintained a ‘Reduce’ rating on India's
larges real estate developer DLF Ltd and set target price of Rs. 161.
The management maintained its sales guidance of about
Rs. 6,000 crore to 6,500 crore for
2012-13, despite slower sales in 1QFY13.
The launch momentum is expected to pick up in H2, with
new launches planned on pan-India basis including Magnolia Phase 2 in Gurgaon.
The company expects sales bookings of Rs.
1,500 to 1,800 crore from Magnolia Phase 2 in the current year.
On the asset sales front, all three large transactions
are under the pre-closing diligence stage, but management has not guided for
any specific timelines on the final closure of these deals. They expect to
achieve debt reduction of Rs. 5,000 by end of this fiscal year.
Nomura believe that even the targeted Rs. 6000 crore toRs. 7,000 crore of asset sales by DLF
Ltd will provide only a temporary relief to the balance sheet. Post the asset
sales, DLF Ltd will still be left with a high, Rs.17,000 of net debt, against
which free cash flow would still be minuscule at current and future estimated
sale & execution levels.
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