Key highlights from DLF Ltd (DLF) Q4 FY22 Earnings Concall
Management Update:
- DLF said it continues to focus on surplus cash generation from its operations. Strong collections along with sales ramp-up led to one of the highest levels of surplus cash generation of INR2,205 crores during FY22.
Q&A Highlights:
Parikshit Kandpal – HDFC Securities – Analyst
- Any key product launches in FY23, as there is new launches contributing majorly to FY22 pre sale?
Vivek Anand – Group CFO
- Looking at launching 7 million sq. ft., mainly residential development across Gurgaon, New Gurgaon, DLF 5, Chennai and Goa, and Panchkula.
Parikshit Kandpal – HDFC Securities – Analyst
- DLF’s new mall retail pipleline over the next 2-3 years and the likely incremental rental?
Sriram Khattar – Managing Director
- DLF believes, organized retail will continue to grow faster than growth of retail.
- Has program to do about 5 million odd sq. ft. of retail developments.
- Biggest being Mall of India Gurgaon.
- The development will more than double the DLF size today over the next 5-6 years.
Saurabh Kumar – JP Morgan – Analyst
- Reason for sharp increase in other expenses?
Vivek Anand – Group CFO
- Other expense has a significant part of scaling up expenses, like more brokerage and marketing expense.
- Q3 to Q4 increase of 58% is largely due to scale-up cost and some year-end provisions.
- YonY basis, costs are within control and grown by 5%.
Saurabh Kumar – JP Morgan – Analyst
- What’s retail income run rate where DCDL is on rental income?
Sriram Khattar – Managing Director
- INR170-175 crores is the exit run rate. In Q3, Q4, if there’s no COVID, DLF should do better.
Kunal Lakhan – CLSA – Analyst
- Company’s broad cash utilization strategy?
Vivek Anand – Group CFO
- While in FY23 collections are likely to improve, the construction outflow from launched projects and capex plans are expected to significantly increase.
- Large part of the cash would get utilized here.
- Lots of cash will be utilized for getting approvals for projects to be launched in FY23 and FY24.
- No plans to deploy cash to buy land; has enough land bank to manage product pipeline for next 5 years.
Kunal Lakhan – CLSA – Analyst
- Is DLF looking at new launches in the luxury segment, besides independent floors projects?
Aakash Ohri – Chief Business Officer
- DLF will be looking at launches in the luxury and premium category.
- Currently embarking on reasonably aggressive launch plan for FY23.
Kunal Lakhan – CLSA – Analyst
- DLF’s physical occupancy in DLF parks and outlook for FY23 and FY24?
Sriram Khattar – Managing Director
- Cyber City occupancy is 35-36%. In 2Q occupancy level should exceed about 70-75%.
- Chennai occupancy is in excess of 80% currently. Coming to pre-COVID levels very quickly.
- Hyderabad occupancy is still at about 20%.
- Calcutta 20-25%.
- By 2Q22, DLF expects occupancies to be healthy to normal.
Sameer Baisiwala – Morgan Stanley – Analyst
- What’s exit rentals of DCCDL for FY23 and the growth levers?
Vivek Anand – Group CFO
- For FY22, INR3,900 crores.
- For FY23 will be INR4,400-4,500 crores.
- Growth levers to come from three buckets.
- Organic growth taking place in the existing portfolio in offices.
- Retail earnings.
- New assets; rent gains commence from FY23.
Sameer Baisiwala – Morgan Stanley – Analyst
- DLF’s REIT plans for DCCDL.
Vivek Anand – Group CFO
- Preparations are in an advanced stage and should be ready in next couple of months.
Puneet Gulati – HSBC – Analyst
- Split of residual construction cost of INR2,077 crore between new and older projects?
Vivek Anand – Group CFO
- Old projects INR400 crores.
- Balance all new projects
Saurabh Patwa – Quest Investment Advisors – Analyst
- Rising interest rate impact on DLF’s commercial real estate business in the context of rental yield expectation.
Ashok Kumar Tyagi – CEO
- On a sustained basis, there will be an impact.
Sriram Khattar – Managing Director
- Impact should not be more than double digits.