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Non-core Assets Sale gaining momentum
DLF is all set to reduce debt through sale of non -core assets and faster
cash generation through sale of plotted development. As per the media
reports, It is planning to sell its 100% hotel subsidiary (DLF Hotels and
Hospitality) to Kolkata based Square Four Housing & Infrastructure for
Rs5.5bn. We believe the deal has been strike out at the 1x of its book
value.
The sale of few non-core assets are in final stages and we expect the same
to conclude including the above one in between Q4FY12 and H1FY13 .This
is likely to help reduce the debt by Rs35-40bn(15-18%) from present net
debt level of Rs 225bn ( D/E at 0.87). We maintain 'BUY' with a target price
of Rs315 and believe that debt reduction will act positively for the stock.
Sale of 100% stake in DLF Hotel and Hospitality business : As per the media
reports, DLF is selling its hotel subsidiary to Kolkata based Square Four Housing
& Infrastructure for Rs5.5bn. Earlier, DLF had acquired the 26% stake held by
Hilton International's for Rs1.2 bn and presently owns100% (74% in FY11)stake in
DLF Hotels and Hospitality .It has signed a non-disclosure agreement with Square
Four and expects to conclude the deal by third week of Jan'12.The net worth of
DLF Hotel and Hospitality is Rs5.7bn (FY11) and we believe the deal works out at
0.9-1x of net worth.This deal is in line with the company’strategy to reduce debt.
Non-core assets sale is the key for debt reduction: The company is actively
looking for sale of its non core assets including Aman Resorts and have already
finalised deal with IDFC for Noida IT park. We believe all the deals (please see
Table-2) including the DLF Hotel & Hospitality will fetch DLF an amount of Rs35-
42bn and this will help the company to reduce its debt. (Presently D/E is -0.87x).
Moreover, plotted sale will help generate faster cash and plays an important role in
tackling the slowdown.
VALUATIONS AND RECOMMENDATION
We retain 'BUY' rating with a target price of Rs315. We believe that DLF is likely
to reduce debt and accelerate cash flows through plot sale and non- core assets
sale that will act positively for the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Non-core Assets Sale gaining momentum
DLF is all set to reduce debt through sale of non -core assets and faster
cash generation through sale of plotted development. As per the media
reports, It is planning to sell its 100% hotel subsidiary (DLF Hotels and
Hospitality) to Kolkata based Square Four Housing & Infrastructure for
Rs5.5bn. We believe the deal has been strike out at the 1x of its book
value.
The sale of few non-core assets are in final stages and we expect the same
to conclude including the above one in between Q4FY12 and H1FY13 .This
is likely to help reduce the debt by Rs35-40bn(15-18%) from present net
debt level of Rs 225bn ( D/E at 0.87). We maintain 'BUY' with a target price
of Rs315 and believe that debt reduction will act positively for the stock.
Sale of 100% stake in DLF Hotel and Hospitality business : As per the media
reports, DLF is selling its hotel subsidiary to Kolkata based Square Four Housing
& Infrastructure for Rs5.5bn. Earlier, DLF had acquired the 26% stake held by
Hilton International's for Rs1.2 bn and presently owns100% (74% in FY11)stake in
DLF Hotels and Hospitality .It has signed a non-disclosure agreement with Square
Four and expects to conclude the deal by third week of Jan'12.The net worth of
DLF Hotel and Hospitality is Rs5.7bn (FY11) and we believe the deal works out at
0.9-1x of net worth.This deal is in line with the company’strategy to reduce debt.
Non-core assets sale is the key for debt reduction: The company is actively
looking for sale of its non core assets including Aman Resorts and have already
finalised deal with IDFC for Noida IT park. We believe all the deals (please see
Table-2) including the DLF Hotel & Hospitality will fetch DLF an amount of Rs35-
42bn and this will help the company to reduce its debt. (Presently D/E is -0.87x).
Moreover, plotted sale will help generate faster cash and plays an important role in
tackling the slowdown.
VALUATIONS AND RECOMMENDATION
We retain 'BUY' rating with a target price of Rs315. We believe that DLF is likely
to reduce debt and accelerate cash flows through plot sale and non- core assets
sale that will act positively for the stock.
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