Company Information

DLF Ltd is involved in the business of colonization and real estate development. The company operations traverse all the aspects of real estate development-from the identification of land, to the acquisition, planning, execution, construction and marketing of projects. It is also involved in the power generation business, maintenance services, hospitality, recreational activities, life insurance etc. Its internal business covers the development and rental business. Development Business of the Company is entrusted with the sale of commercial spaces, residential spaces and commercial complexes. The company has an unusual business model with its entire revenue generating through rentals and development. Its exposure across different types of businesses, sectors and geography, moderates a downward trend in the market. The company has also delved into infrastructure, SEZ and hotel businesses to amplify their reach. The DLF business is organized on a Strategic Business Unit(SBU) basis.  SBU caters to the three primary segments of the residential market - Super Luxury, Luxury and Mid-Income. The product offering comprises of a wide range of products including duplexes, condominiums, row houses and apartments of differing sizes.

DLF Limited: History and Trends

DLF Ltd was consolidated in the year 1963. Chaudhary Raghuvendra Singh founded the company. The company was responsible for developing some of the first residential colonies of Delhi such as Krishna Nagar in East Delhi, which completed in 1949. Adhering to the Delhi Development Act,1957, the state assumed the full authority of the real estate development activities in Delhi, which imposed restrictions on the private real estate colony development programs. Therefore, the company started acquiring low-cost lands on the outskirts of Delhi, that is now controlled by the Delhi Development Authority. Most of the land was particularly in the district of Gurgaon. This led to their first real estate development project, the DLF Qutab Enclave, which has now evolved into the DLF City. DLF City is scattered over 3,000 acres in Gurgaon and it is an integrated township, which includes commercial, residential and retail properties in the modern city infrastructure which has schools, hospitals, hotels and shopping malls. It also possesses the prestigious DLF Golf and Country Club with luxurious facilities. Through the period 1950-1964, the company developed 22 urban colonies in different cities. In 1985, the company started development of the 3,000-acre DLF City in Gurgaon.

Venturing into Group Housing Projects, Life Insurance and the Capital market

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Strategic Alliance between DLF and PVR Limted

Objective: Divesting the Non-Strategic Assets

Expanding the Hospitality Business: DLF Global Hospitality Limited

DLF Global Hospitality Ltd had acquired 100% equity in Amanresorts in 2007 from an investors group. The deal excluded the iconic Lodhi Hotel in Delhi which remained a part of DLF Ltd. In September 2015, DLF stated that its wholly-owned subsidiary DLF Home Developers Ltd. (DHDL) and GIC, which is Singapore’s sovereign wealth fund, had entered a joint venture to invest in the two upcoming projects located in Central Delhi. Both projects were developed under DHDL and GIC had invested about 1990 crores in this project. In 2016, DLF launched the DLF Mall of India which is the first destination mall of the country, in Noida NCR. The DLF Mall is spread across 2 million square feet.

In 2017, GIC Real Estate partnered with DLF Cyber City Developers Limited (DCCDL) following the conclusion of Compulsorily Convertible Preference Shares (CCPS) transaction earlier that year. Consequently, the promoters of DLF infused 9000 crores through subscription to Compulsorily Convertible Unsecured Debentures (CCDs) and the warrants of DLF Limited. DCCDL manages a rent-yielding portfolio of retail assets of approximately 27 million square feet, which has a significant potential for development. In the same year, DLF launched The Chanakya Mall, in Lutyens' Delhi. The Chanakya Mall is a destination where architecture synchronizes harmoniously with the largest brands in the world. The Chanakya gives a curated experience of Retail, Food and Cinema. It is a part of DLF's luxury possessions and showcases some of the leading extravagant national and international brands.

Should You Invest in DLF Limited?

Investors and analysts all over the world believe that DLF Limited is an interesting stock to invest in. As already discussed in the article DLF has a tendency of divesting it's non-strategic assets, to maintain a good financial health and it has a strong history of performance.

In 2018, it outperformed its past performance. Also, it's growth surpassed the Real estate industry Expansion. However, presently, the stocks of DLF are trading at one-tenth of its peak valuation. The BJP-led Haryana government has stated that there will be a probe on all the land scams, and one of the land scams involves DLF. DLF was also slapped with a penalty from SEBI for failing to disclose key information at the time of its record-breaking 2007 IPO.

Between the FY 201-2015, the rental income of DLF increased by three times but it's debt remained constant in this period. This shows that there is no immediate liquidity crisis for the company.

Betting on DLF Limited at this point could go either way. SEBI slapping a penalty on the company has raised many red flags and it can affect the financial health of the company. Analysts have also hinted on the unpredictability of the value of DLF stocks. As of now, it is better to avoid investing in the company.