DLF shows strong potential amid aggressive launch pipeline: Report

DLF in focus: Real estate company DLF has demonstrated strong performance and growth prospects, particularly highlighted by its recent bookings surpassing full-year guidance during the first nine months of financial year 2024 (9MFY24). 

However, while the company's launch pipeline provides good visibility for the near term, its current valuations seem to already factor in anticipated growth and a strong price compound annual growth rate (CAGR), analysts at Motilal Oswal noted.

With a comprehensive launch pipeline of residential projects totaling 26 million square feet (msf) over the next 2-3 years, DLF anticipates healthy sales traction, particularly in Gurugram.

The company's pricing benchmarks in DLF 5, notably with an expected realisation of Rs 50,000 per square feet for an upcoming project, indicate its potential for setting new standards in the market, the Mumbai-based brokerage said in a note.

Despite its major land bank reserves, analysts suggest limited upside potential in DLF's valuation. The brokerage estimate an 8-10 per cent compound annual growth rate (CAGR) in prices across its key markets, factoring in aggressive launch plans and the potential for higher realisations. 

Therefore, the Mumbai-based brokerage has revised the target price to Rs 850, which reflects a 7 per cent potential downside, prompting a ‘neutral’ rating.

However, DLF's existing portfolio, largely leased, coupled with strategic developments like Downtown Chennai and expansion in retail assets, underpin its growth trajectory. 

While DLF remains set for healthy performance in the near term, investors should consider the balanced risk-reward scenario suggested by its current valuation.

As of 9:32 am, shares of DLF were trading 2.15 per cent lower at Rs 890.75 per share.