In an analyst call, DLF Group Chief Financial Officer Saurabh Chawla provided a sales bookings guidance of Rs 20 billion to Rs 25 billion for 2018-19. The figure is likely to be revised if housing demand improves.
The value of unsold inventories declined to Rs 140 billion from Rs 150 billion. Chawla said DLF had a net debt of Rs 6.2 billion at the end of 2017-18.
DLF expects to be debt free by next March, aided by a capital infusion of Rs 2.25 billion by the promoters and the proposed sale of over 170 million shares to institutional investors through qualified institutional placement (QIP).
DLF had earlier planned a QIP in June to raise Rs 4 billion to Rs 4.5 billion, sources said.
“The target is to achieve zero net debt by March 31, 2019, from Rs 6.2 billion as of March 31, 2018. The company is expected to achieve zero net debt by capital actions, QIP of about 173 million shares and residual inflow from promoters of Rs 2.25 billion,” the company said in the presentation.
The company has got into a build-to-sales cycle of three to four years, where it sells down completed inventory while building new inventory.
The company said commercial projects would be sold to either retail customers (B2C) or to DLF Cyber City Developers Ltd (DCCDL) as investment properties (B2B business model). “Additional interest costs during construction is expected to be very marginal and can get absorbed in higher realisations from the sale of completed property and timely completion of projects,” it said in the presentation. DCCDL will act as a ‘private’ REIT – it will build its own investment properties of around 19 million square feet.
With the development of the embedded land bank, contractual growth of rentals and rent reversions, and transfer of assets, the earnings before interest, taxes, depreciation and amortisation (Ebitda) of DCCDL is expected to grow in the healthy double digits during the next 10 years.
DLF promoters sold a 40 per cent stake in DCCDL for nearly Rs 120 billion. The deal included sale of a 33.33 per cent stake to GIC for about Rs 9 billion. After this deal, DLF’s stake in DCCDL rose to 66.66 per cent from 60 per cent.