Category Archives: Indian Stock Market

Indian Stock Market, Real Estate Stocks

DLF can see better times ahead- BofA Merrill Lynch

BofA Merrill Lynch feels the worst seems behind for DLF with their 2Q disappointment, and maintains Buy rating on DLF with a target price of Rs 245. Summary of BofA Merrill Lynch view on DLF:
DLF’s 2Q FY2013 earnings of Rs3.7bn were 10% ahead of our estimate driven by better than expected revenue recognition from the FSI sale in Gurgaon. While we were expecting unexciting performance in 2Q, sharply lower pre sales at 1.3mn sq ft and Rs10bn increase in net debt surprised negatively.

We maintain our Buy rating with target price Rs245 based on 15% discount to our NAV, offering 8% upside. We expect DLF to deliver on its deleveraging guidance for FY12 while FY13 should see strong volume recovery for DLF (particularly in Gurgaon).

3Q to mark the turnaround in cash flows. We expect 3Q to change the rising trend in DLF’s debt (has increased consistently since FY08) as asset sales come through. The higher than expected increase in debt was primarily due to higher tax outgo (Rs4bn), lower sales booking impacting operational cash flow and foreign exchange debt. We expect stronger sales booking in 2H which will help achieve operational break even
(Rs25bn against just ~Rs16bn in 1H) while about 30bn cash inflow from non core asset sale should help DLF achieve its guidance on debt reduction to sub Rs200bn.

Volume recovery in 2H led by plotted launches. We expect substantial improvement in booking volume in 2H (similar to FY11 when 60% of the volume was contributed in 2H) with DLF’s continued focus on plotted launches in North India (~4-5mn sq ft). Our estimates already factor in slower volume at 9mn sq ft (DLF targeting 10-12mn, -10% YoY) with sales value of Rs41.5bn (-35% YoY) given lack of launches in the luxury segment.

Gurgaon market is our favorite; DLF should rebound
DLF derives 40% of its NAV from Gurgaon which we expect will outperform all other markets in FY13. We are not only expecting prices to hold up in DLF’s prime Gurgaon land but also expect strong volume rebound in Gurgaon market in FY13.

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Economic Data Review -29May2011

Global Economic Data Review for the week ended Friday, 27 May 2011.

Nymex crude traded within a tight range of $ 97 -$100/ barrel for the week. Crude could spike up to $120 if middle east tension moves any higher. Crude oil price rise will harm world economic growth in the near term. Much of the price rise is speculative, hence the negative impact from price rise.

The week witnessed negative economic data from US. The report from the Commerce Department indicated, a bigger than expected drop in durable goods orders by 3.6% in April following an upwardly revised 4.4% increase in March. According to the report, 424,000 Americans filed initial claims for unemployment insurance, an increase of 10,000 from the previous weeks revised figure of 4,14,000. Continue reading Economic Data Review -29May2011 →

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Stock Market Analysis – 12 March 2011

Market mood was negative on account of Japan Earthquake and ongoing unrest in Libya and middle east region and constant threat of spike in crude oil prices.

In the week closing 11 March 2011, the Indian stock Index S&P CNX Nifty traded in a tight range of 5560-5410. Nifty closed in red in three out of five trading days. Week-on-week basis, the Sensex was down by 312 points or -1.7%, to close at 18174.39 levels. The Nifty also closed in the red down by 93 points, or 1.7%, to close at 5445 for the week. Metals, Capital Goods and Banking stocks were the major losers, with heavy weights like Tata Steel, L&T, BHEL, State Bank faced selling pressure, where as Reliance Industries and Reliance Capital were the major gainers. Food inflation for the week ended Feb 26, 2011 was 9.52% (v/s 10.39% last week). IIP numbers were positive in India. In Feb 2011, exports were $23.6 bn (49.8% growth YoY) while imports were $31.7 bn (21.2% gr wth YoY). IIP nos for Jan 2011 came at 3.7% (street estimates: 2.7%) while the December IIP was revised from 1.6% to 2.5%. Continue reading Stock Market Analysis – 12 March 2011 →