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DLF Ltd Q4 FY22 Earnings Conference Call Insights

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.
Tags: REITs
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