India's largest real estate firm expects to close some of the deals by June and would utilise the funds to improve its cash-flows that have been affected due to slowdown in housing demand
Realty major DLF plans to divest around 50 per cent stake each in four new housing projects to private equity firms for over Rs 3,000 crore, a senior company official said Sunday.
India's largest real estate firm expects to close some of the deals by June and would utilise the funds to improve its cash-flows that have been affected due to slowdown in housing demand. "We are looking for private equity in 4 greenfield housing projects in Delhi-NCR and South India," DLF Chief Financial officer (CFO) Ashok Tyagi told PTI.
He said discussions with few private equity players have started but declined to disclose their names. Tyagi hoped that at least 2-3 PE deals should get closed by June-end. "We are targeting to raise about Rs 2,500 crore by June from 2-3 deals".
Asked about the dilution of stake in each of the 4 housing projects, Tyagi said it would be around 50 percent. On the utilisation of funds raised via private equity at projects level, he said the same would be utilised "to augment the operating cash flow of our development arm DevCo". DLF has divided its real estate business in two parts - DevCo, under which all residential projects fall, and RentCo, which is the rental business from office and retail projects.
"Since sales are slow, we are planning to raise about Rs 3,000 crore through private equity. In the short term, PE fund will be the substitute for the cash flow which would have normally come from sales," Tyagi said. DLF CFO said out of Rs 20,336 crore net debt, nearly Rs 6,500 crore pertains to DevCo.
"Debt of DevCo will remain around this level in short term and we will pare the debt as and when sales improve," he added. On RentCo's debt, Tyagi said it would increase in the short term and eventually get reduced through launch of two Real Estate Investment Trusts (REITs). Earlier this month, DLF had reported 9 per cent decline in consolidated net profit at Rs 131.79 crore for the quarter ended December due to fall in sales and other income.
Its net profit stood at Rs 145.29 crore in the year-ago period. Income from operations fell 5 per cent to Rs 1,956.72 crore for the third quarter of this fiscal from Rs 2,058.42 crore in the corresponding period of the previous year. Total income declined by 20 per cent to Rs 2,079.82 crore for the quarter ended December from Rs 2,590.2 crore in the year-ago period.
DLF has a land bank of about 295 million square feet, of which 50 million square feet is under development.
DLF stock price
On February 20, 2015, DLF closed at Rs 151.30, up Rs 1.10, or 0.73 percent. The 52-week high of the share was Rs 242.80 and the 52-week low was Rs 100.00.
The company's trailing 12-month (TTM) EPS was at Rs 4.83 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 31.33. The latest book value of the company is Rs 93.40 per share. At current value, the price-to-book value of the company is 1.62.
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