The Indian housing market is expected to contribute around 10% to India’s GDP and touch US$180 billion in the next few years. Retail, hospitality and commercial real estate sectors are expected to grow significantly, providing the much needed infrastructure for the country’s growing needs. Private equity and debt investments have been growing by around 12% during the last few years, with private equity investment in Indian retail assets increasing by almost 15% to reach US$800 million. With the real estate market becoming more transparent, the sector is expected to see increasing transactions in the coming years on the back of comfortable home loans. Sectors such as IT, retail, consulting and e-commerce are registering high demand for office space, with private equity inflows growing 150% in the last few years. The government has also taken several initiatives to encourage development in this sector by creating the National Urban Housing Fund, approving an outlay of Rs 60,000 crore for it. Moreover, real estate developers are also accepting the challenge and shifting from family owned businesses to professionally managed ones. Similarly, increased transparency has encouraged higher inflow of Foreign Direct Investment into the real estate sector in the last few years. In the real estate sector, DLF is a name synonymous with global standards, new generation workspaces and lifestyles. It has the distinction of developing office projects, IT parks and IT SEZs that are at par with the best in the world. The company is a preferred name with many leading Indian and international corporate giants, including GE, IBM, Microsoft, Canon, Citibank, Hewitt, WNS, Bank of America, Cognizant, Accenture, Barclays, Samsung, Google, Symantec, TCS, Infosys among others. The company had pioneered the retail revolution in the country and brought about a paradigm shift in the industry by redefining shopping, recreation and leisure experiences. DLF’s retail portfolio includes India’s first luxury mall DLF Emporio, premium malls DLF Promenade at Vasant Kunj in New Delhi, DLF Place at Saket in New Delhi, DLF City Centre in Chandigarh, DLF Cyber Hub in Gurgaon and India’s largest destination mall, Mall of India in Noida. The latest addition to the luxury collection is Chanakya in Chanakyapuri, which is situated in the heart of Lutyens’ Delhi. The company had posted a consolidated net profit of Rs 244 crore for the fourth quarter of the financial year 2018, while the consolidated revenue for the same period was Rs 1,846 crore and EBIDA at Rs 454 crore. With leverage metrics improving and strong focus on NCR development, the outlook and valuation for DLF looks quite attractive on the back of improving trajectory. Many analysts have given a buy signal for the DLF stock in anticipation of a gradual uptick in the performance of the business, ongoing consolidation in the sector, attractive rental portfolio and improving balance sheet of the company. DLF aims to achieve its objective of net zero debt level by end of the current fiscal and hence the stock currently quoting at Rs 186 can be bought for a 40% price appreciation in the next one year.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.