DLF Limited

Business of DLF

DLF is the largest real estate company in the country in terms of completed residential and commercial property development. DLF is in the business of end to end real estate development which focuses on residential and commercial properties. This involves identification of land, acquisition of land, planning, execution and marketing the developed property. In the residential building line DLF markets and sells various houses built and developed by it and with a focus on the higher end of the market.
In the commercial line DLF builds and either sells or leases commercial offices with a special focus to MNCs.

Apart from this DLF is also in the retail business line where it develops, manages and leases shopping malls which in some cases also have multiplex cinema halls. The company has also entered the Infrastructure, SEZs and hotels businesses.

DLF was found in 1946 and has since then become the largest real estate company with development of approximately 220 million square feet of land. DLF has extensive land reserves in the country amounting to 10,255 acres with a developable area of roughly 574 million square feet. Out of this 574 million the company owns about 29 million square feet along with other parties and owns the sole rights to the rest of the land. The company’s focus has so far been the NCR but now it is expanding its core operations to the rest of the country as well. The majority of the land holdings lie in the urban areas or areas which under the urban category based on the master plans of various states.

Financials

The company has gained in its financial strength in the last three years with additions both in top line and bottom line. The revenues have increased from Rs.5266 million in 2004 to Rs.6240 million in 2005 and 12,420 in 2006 with corresponding profit figures of Rs.538 million, Rs.865 million and Rs.1917 million. The majority source of revenues for the company is the sale of the real estate developed by it and the project cost constitutes the largest source of expenditure for the company.
The above profit and revenue figures show that the profitability of the company is steadily growing and currently stands at 15% of its revenues. The adjusted EPS for the year ended March 31 2006 stands at Rs.12.34.

Objects of the Issue

The IPO of DLF is expected to be the biggest that the country has seen so far and the purpose of the IPO is the acquisition and development of land on which DLF plans to spend Rs. 65000 million and development and construction costs for existing projects on which the company plans to spend Rs.34993 million rupees. Apart from this the proceeds of the issue are also expected to be used for part prepayment of debt that the company has incurred.

Conclusion

DLF is a powerhouse of real estate development in India and with its thrust in the new areas of expansion that it has identified it is expected to become a driver of growth for the investors. However in such a scenario one need to also keep an eye on the price that the company is offering its share to the shareholders and see whether the company is not charging a P/E multiple that is too high.

3 thoughts on “DLF Limited”

  1. Dear Sir/Madam,
    As We are in a business of Properties for the last couple of years,and having a good experience in a same.We want to accosiate with your company in Land Accquization etc .
    Kindly give us a chance serive you,and We hope for a Positve responce from your side.

    with Regards,
    Catalyst Builders & Property

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