Nuvama has reiterated its bullish stance on DLF following a recent analyst meet where the real estate major laid out its ambitious medium-term strategy. The brokerage has maintained a ‘Buy’ rating on the stock, albeit with a revised target price of ₹927 (down from ₹1,040), as it rolls forward valuations to Q4FY27E. Nuvama noted DLF’s continued strength in profitability, robust cash flows, and rental expansion, even as it expects broader sector moderation due to affordability concerns.
DLF is banking on a solid development pipeline, with housing launches worth ₹740 billion planned over the medium term. Impressively, the company delivered 44% growth in pre-sales value over 9MFY25 despite a sector-wide slowdown in housing volumes. It aims to match FY25 sales levels in FY26, supported by project launches totaling 29 million square feet, with ₹200 billion worth of launches targeted specifically for FY26. The expected gross margin from these projects, both launched and upcoming, stands at ₹670 billion. Net of all project expenses, surplus cash flows from these developments are projected at ₹410 billion.
On the rental side, DLF is building what Nuvama calls “a giant in the making.” Its current rental portfolio, combining DLF and DCCDL assets, stands at ~43 million square feet. The company expects total rentals to cross ₹50 billion in FY25, up from ₹32.6 billion in FY21. DLF has outlined a ₹200 billion capex plan to expand its rental assets to 73 million square feet by FY30—60 million square feet in offices and 13 million in retail spaces. This growth is expected to push annual rental income past ₹100 billion, nearly doubling over the next five years.
Nuvama also emphasized DLF’s rising development potential, bolstered by favorable TOD (Transit-Oriented Development) and TDR (Transferable Development Rights) policies. The development arm (Devco) will retain 144 million square feet of land bank even after exhausting its current pipeline, while DCCDL will have 62 million square feet of surplus land. This ensures growth visibility for at least two more decades.
DLF’s balance sheet remains solid, with Devco now holding a net cash position of ₹45 billion. Gross debt for Devco is around ₹44 billion against a cash balance of ₹90 billion. While DCCDL has a net debt of ₹167 billion, the group’s goal is to bring consolidated net debt to zero in the medium term. The management has also indicated a willingness to consider a dividend payout ratio of around 50% of PAT once the balance sheet is deleveraged.
With a robust launch pipeline, sector-leading margins, increasing rental streams, and a path to becoming debt-free, DLF remains Nuvama’s top pick in the real estate sector despite a slight valuation downgrade.
