Customer service improving? DLF:: Religare

Customer service improving?
DLF, in its recent attempt to resolve complaints raised by customers of its New Gurgaon-based project, seems to have adhered to its newly-forged strategy to enhance CRM practices. This development, we thus believe, is a step in the right direction. While the stock remains under pressure on concerns over delays in debt reduction, we remain positive on DLF over the mid-to-long term on potential improvement in operations. Maintain BUY

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 Event: Customers of DLF’s New Gurgaon-based New Town Heights project have complained against weak customer services and an increase in property costs. The company, in a letter to flat owners, has tried resolving these issues in a transparent manner. We note that there have been a number of cases (earlier in Chennai/ Gurgaon, now in New Gurgaon) where DLF has faced customer ire on construction delays and weak customer services.
 Our view: While such issues may occur/recur, the key is to settle them in a transparent manner. This letter and its soft wordings have come as positive surprise to those who have witnessed DLF’s unfriendly CRM practices in the past. In an earlier interaction, DLF suggested increased thrust on customer support and this communication suggests a step in that direction.
 Maintain BUY: The stock is down 24% over last month (underperforming the SENSEX 19%) on a weak P/L, delay in sales receipts from Aman Resorts and slower launches/sales. While these issues may weigh on the stock until sales/launches pick up, we continue to see a potential improvement in operations led by a stronger rental portfolio, debt reduction and higher cash flows from high-end projects.
 Note: DLF New Town Heights is DLF’s biggest project in New Gurgaon (~3000units) and was launched in 2008 (just before the economic downturn). DLF got the completion certificate in Q4FY13 and is looking to offer possession by June’13.