DLF Limited (DLF) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to DLF Limited's Q2 FY27 earnings conference call. We have with us today on the call, Mr. Ashok Tyagi, Managing Director, DLF Limited, Mr. Akash Ohri, Managing Director and Chief Business Officer, and Mr. Badal Bagri, Group CFO, DLF Limited. As a reminder, all participant lines will be in the lesson-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference and meeting is being recorded. In our hand, the conference, thank you, and over to you, sir.

Good afternoon, everyone, and thank you for joining us today. We are pleased to report yet another strong performance, reflecting the underlying quality of our assets, disciplined execution, our brand strength, and prudent capital allocation across a well-diversified mix of development and annuity business. Strong cash generation and robust balance sheet continues to position us well for sustained growth in future. I'll briefly talk about the operating and financial highlights. New sales booking for the quarter stood at 3,800 crores approximately. We launched Aureva, the luxury retirement housing address, which received an extremely strong response with a We continue to see absolutely strong demand for our super luxurious project daily hours in the current quarter as well. Our collections stood at 2,780 crores in the current quarter, resulting in operating cash flow of approximately 1,858 crores. Net cash position stood at approximately 15,100 crores. Despite a very, very strong dividend payout in the current quarter of close to 1980 crores, our rental portfolio stood at 50 million square feet. The portfolio has now achieved its ever-highest occupancy levels, 96% in terms of area and 97% by value. This continues to be among the highest in the industry. The rental business maintained strong momentum, delivering healthy top-line growth and high-team growth in profitability. Moving on to financial numbers, overall consolidated revenue stood at 2298 crores. This includes a one-time gain of 738 crores, which is accounted for as other income, which is due to valuation of one of the investments which we have made in one of our JV companies. As per accounting standards, EBITDA stood at 1060 crores, resulting in a net profit of over 1300 crores. The gross margin potential of our development business continues to stand at approximately 40 000 crores with a potential of cash generation of over 42 500 crores. For DCCDL, our consolidated Limited revenue stood at 2014, revenue stood at 2014 crores, EBITDA at 1537 crores, resulting a net profit of over 750 crores for the current quarter, reflecting an year-over-year growth of 17%. With this, I would like to hand over back to all of you for Q&A.

Thank you very much. We will now begin the question and answer session. Participants Participants connected through the audio call may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Participants connected through the webcast may click on Ask a Question tab. Accept the prompt, connect via Zoom, post which you may click on raise an icon to ask your question. The operator will announce your Name to proceed with your question. Kindly accept the prompt, unmute your audio, turn on your video while asking your question. Please note, participants are requested to announce your company name before proceeding with your question. We will wait for a moment while the question queue assembles. First question is from the line of Puneet. Kindly accept the prompt, unmute your audio, and proceed with your question. Can you announce your company name before proceeding with your question?

Sure. So, this is Puneet from HSBC. Congratulations on good launch of Oriva. My first question is, are you happy with the time it took to launch and sell? Because typically, you guys sell out much faster. This time, it got extended into a couple of days into October. Any thoughts on that?

A couple of days into October. I thought the entire sales concluded by September 30th, but... No, Kunit. So, the sales concluded. See, what we do is that we take the first initial booking, and that's a substantial amount, as you know, that's 50,000 rupees. And everything concluded We did before 30th of September. And, you know, the paperwork and all that obviously sometimes takes time, but you hear even the forms and KYC's and everything. So we report once the money is in the account, the forms and KYC's are done. We don't report otherwise. Understood, that's very clear. The codes that came in, the Swift code, sometimes, you know, the tallying takes time because the bank holidays and all were there, weekend. That's how. So, I think we are a bit too precise, you know, in what we do. Otherwise, technically, everything was done before 30th September.

Understood. Secondly, on… The booking amount was 50 lakhs. 50 lakhs.

Yeah, that's very clear.

Secondly, on Dahlia's, you talked about… Taking the price increases. Are you already seeing those price increases or should we still expect them post the launch of Experience Center?

No, no. If you see this time's report, Delia's has been seeing a price increase. In fact, it's already gone up by almost about 10% even this time. And the post the Experience Center, once the show and tell begins, it's going to be there. So the total super luxury, including the Camellias, we did draw sales about 19 this quarter. And so Delia has shown a very, very strong thing. In fact, this time, the North sales have happened, so which you may have seen per unit, about 120, 324, 125 crores per unit. That's the 10,000 square feet ones. And the one penthouse that we reported for about 271. So, this time, there were more north sales than there were south, you know. Plus, obviously, Delia's is the algorithm, the price algorithm makes sure that there is an increase with every sale. So, it is not linked to velocity or it's not linked to, you know, the number of sales. It's a progressive kind of a statement.

Got it. And North commands better value, you said, versus South.

Yeah, there's a 20 to 25 Watt-Cauron price difference between North and South. Okay. And when should we expect launch of Experience Center? Experience Center should be now. We're on the last leg, actually, unless Grap or anything else stalls it. But I think we're just now, you know, getting everything together. Uh, and, uh, we will, we hope, we hope if everything goes well, it'll be by December. And, uh, so, yeah. So, so meaningful pickup into Q4 then? No, Q3 also. I mean, see, now we've demonstrated enough, if you see, that is nothing to do with, uh, if you see the kind of, now we're almost, what, about, uh, uh, nearing about 200, 20 odd sales.

274 units have been sold so far.

Yeah, 276 also, two more. Yeah, 200. So, plus two. So, I'm just, that's what I'm saying, Mary, almost turning to 80. And also, see, if you see, there has been a consistent sale as far as daily as it's concerned. You know, if you've been tracking it for one and a half years, if you've seen it. So there is a reasonable amount of now, I feel, trust, which is established. Price points, most importantly, it was the price point that had to be established and understood by people, which is now a given. I'm happy to also tell you that most recently, in the south also, we've done about 100 crores. We just clocked 100 crores per apartment, which is also kind of the new landmark. So basically, what's happening is that has become the new norm, and that's how it's going on.

Understood. That's very clear. Secondly, on the commissioning, no major commissioning expected in FI 27 and 28 should be Arbor or should any change in completion plans?

Yeah, that's true, Puneet. As we have said that our inflection point is 27, 28 from Arbor and thereafter their series of projects will start getting completed. So from 27 or 28 onwards, Arbor onwards, you'll see a series of projects getting completed.

Because then, Puneet, we get into that virtual cycle over the next three years after that of Arbor, the three Privanas, you know, Delia itself. So, I think then, so really in that sense, this shadow of the earlier, I mean, post-Cameleas and pre-Arbor, that shadow, I think, we are hopefully in the last four or two hours of that, in that sense.

Got it very good. And on the commercial side, DCCDL, what should we expect commissioning in 28 and 29?

So DCCDL, we continue to keep on working on the balance office towers of downtown Gurgaon, the mall of India Gurgaon, and the downtown Chennai. And correct me, Naveen and brother, I think by and large by fiscal 30, everything will be done, yes.

But in 28, Block 7 of downtown was supposed to come in, 2.3. That's on track? Block 7 should come in next year?

And Goa should come in by December. By December. And Chennai by calendar next year.

Sorry, which one? Goa, downtown Chennai and Building 7 should all happen in the next year. And Goa this fiscal and the balance to next fiscal.

Okay, so Chennai Block 3 should come in, 3.6 million. So, next year should be a big year even from those completions. So, 2.3 plus 3.6 within DCG.

So, blocks 4 and 5. Blocks 4 and 5 of down point gen 9.

That's how much in total? 3.6. 3.6. 3.6. Okay. That's very clear. Thank you so much and all the best.

Just to get one additional point, Puneet, and this will be for all others, and this also depends on the mix and the kind of sale which we did. On a saleable, on an average, we were much ahead of 100,000 per square realization per square rate in this quarter. So that price increase has been realizing and it has come a long way from the time when we had launched it.

Understood. Thank you so much.

Thank you. Participants on the audio bridge may press star and one to ask a question. Participants connected on the webcast may click on ask a question tab. Accept the prompt, connect via Zoom, and click on raise an icon to ask your question. Next question is from the line of Abhinav Sinha from Jefferies India. Please go ahead.

Hi, good to see the results this time. My question is firstly on the rental component, so we have seen in DLF rentals climb up to We have about 120 crores this quarter. What is the exit run rate that we should expect?

So exit run rate, I would say with full potential, it should be close to 175-180 crores this year. Quarterly. Quarterly. Quarterly. Quarterly. So on an annual basis close to 750 crores annual.

Okay. X of Atrium.

X of Atrium, yes.

I am talking of only DLF portfolio. Yeah, yeah, yeah. So second question is on cash flows. So construction expenditure seems to be running a little bit lower in the first half of the year. And we're also hearing about, you know, the Delhi government putting in a lot of impositions on construction in the months ahead. So what's the outlook on the cash flow, commensurate, you know, inflows that you will get on the installment from customers? and broadly completion timeline.

So, look, honestly, on the completion timeline, broadly, give or take a quarter, we don't right now foresee any challenges. But last quarter and possibly this quarter could see a slight blip in construction outflows primarily on two things. A, of course, is the fact that we are now entering the phase of chronic labor, you know, migration back, you know, for for chat, puja and everything else that happens during this quarter. So traditionally, and B is that honestly, the GRAP guidelines, you know, printed in the papers pertain to Delhi. Delhi government has announced them. Typically, in, I mean, in Gurdaw, we have seen 30 to, almost 30 to 40 days of GRAP happens once those, you know, those guidelines come to place, those specific thresholds. So let's see. Currently, of course, you know, air quality continues to be okay. But, you know, we are entering the challenging AQI season. So maybe there would be continue to be this Q3 may still have some challenges on the construction outflow. But I do believe that fundamentally the contractors are in place, their labor arrangements are in place. And I think this quarter also we should see a decent progress. And post-grab definitely I think this challenge should be should disappear. Again, but something which, if I may say so, is a concern, but I don't think it's a crisis, you know, by any stretch.

Okay, thanks for that. Let's share just one last question. So, on dividends, I know, I mean, company has stepped up the payout. Do you think you can migrate to, say, a quarterly or, say, a half yearly dividend in another couple of years, given that we've got very strong and cash flows now?

So, this I will hold my horses because I myself don't know the answer. What we are doing is that we are clearly establishing a more predictable dividend pipeline from DCC-DL to DLF, you know, on a regular basis. But, Abhi, DLF dividends continue to be annual, you know, we'll see in the future. But right now, I think our guidance continues to be an annual dividend.

Great. Thanks, and all the best.

Thank you. Next question is from Danuk Pritesh. Kindly accept the prompt. Announce your company name and proceed with your question.

Yeah, hi, Pritesh here from Access Capital. First, just bookkeeping one. I see two different inventory numbers reported in our presentation. You know, in slide 12, we have mentioned balance surplus from unsold inventory to be 15,000 crore. And on slide 14, we have mentioned at 11,000 crore. So, how should I look at these two numbers?

The value of inventory is 15,000 crores. The margin of that inventory is 11,000 crores. If you look at page 14, it is written 10, 8, 25 is the balance margin yet to be recognized. So, $11,000 is the margin of the value of inventory.

Sorry, yeah, my bad. I have to understand that. Thanks for the clarification. Second is, you know, on the land spend that we have been doing since last two quarters, I recollect last quarter was a big NOIDA payment that we made. This quarter also we have made like around $350 crore of land payment. So any, you know, opportunities that we are looking at, you know, and, yeah, some details on that, yeah.

So, Pritesh, if you recall, about two years back, we had done a transaction through acquisition of bonds of 28.5 odd acres of land from IBO. So the 19.5 acres had been convinced to us about, I think, 18 months back. There was a 7.06 acre parcel, which was still, you know, had some encumbrances needed to be removed. So those were done this quarter. And so the complete payment of that was made, was made in this quarter. And we also entered into a collaboration for a fresh 7.48 acres of land, again, which is contiguous to this 28 acres. So, eventually, it will be a 36-acre land parcel contiguous in Sector 61 that we'll have. So, some small payment was also made for that. This, again, is coming through a bank delinquency rule in that sense. So, the proceeds of this will be paid out to the lenders of that company.

Interesting. So, the project potential has enhanced now after this additional 7.

It has enhanced. And hopefully, by Q4, we should be able to conclude this entire transaction.

And getting up to launch next year?

Okay, okay, okay.

Just for next two quarters, we know how the series of launches would be like Mumbai Q3 and Magnolias to Q4. Is the timeline correct?

So, Pradesh, before I hand over to Akash, you know, we have set up a series, I mean, reasonably Yeah, I think

the same, we are gearing up for both this Mumbai launch for Q3, and then, of course, there's a Gurgaon one, and then the Dahlia is continuing, and some other, whatever, what are you doing?

And just one last, you know, with this Delhi master plan getting approved, I know it's still early stages, but any opportunity apart from the existing land that we have between Midtown and Chanakya Puri, you know, anything else we, you know, gets unlocked, you know, from this approval?

So, we have no other land parcels, really, apart from Midtown and Chalakya Puri. Let's see how this policy plays out, and then we'll think, but it's still early days, frankly.

That's it from my side. All the best. Thank you.

Thank you. Thank you. Next question is from Land of Parvez. Kindly accept the prompt, announce your company name, and proceed with your question.

Hi, good afternoon, team. This is Parvish from Novama. So, one question from my child, you had earlier given the exit rental guidance for the rental assets in Devco, would be great if we could get the same for DC CDL also.

So, the exit rental for DC CDL would be close to 6,800 crores, Parvish.

Sure. And when do we expect the mall of India Gurgaon to get completed? Will this be FI 29 or FI 30?

FI 30. FI 30.

Thanks and all the best. Thank you.

Thank you very much. Participants, you may press star and 1 to ask a question. Next question is from Naino Satinder Bedi. Satandar Bedi, kindly accept the prompt, announce your company name, and proceed with your question. Satandar Bedi, may I request you to accept the prompt, unmute, and proceed with your question. Satandar, if you can hear us, do you need to know response? We move on to the next participant. Next question is from Samarit Khandelwal. Kindly accept the prompt. And answer your company name and proceed with your question.

Am I audible?

Yes.

Good morning. Good afternoon, sir. Thank you for this opportunity. I am from ICICI Securities. My name is Samarit Khandelwal. My question is regarding the Project Hamilton. Have you decided what kind of option that will be and when can we expect to be launched?

So that is not the name of the project. We've yet to name it. It's in the same vicinity. But it is going to be a luxury plus product and we aim to launch it in Q4. And it is going to be, it's in the heart of DLF City, so please expect a very, I'd say, it is going to be a luxury product, and it is going to be one of its kind. It's going to be at par with our recent luxury launches. So, it is in DLF Phase 4, and we are scheduling a launch sometime in Q4.

Okay, that's wonderful. Thank you.

Thank you. Thank you very much. Next question is from Land of Gupta. Kindly announce your full name and your company name, and proceed with your question.

Hi, thank you for taking my question. This is Akash Gopta from Numura. Congrats on a good booking performance also. Sir, my question was on the DCCDL rental portfolio. I just wanted to get a clarity on how are we looking at the new volumes that are coming in on the DCCDL side between FY28 to FY30. So, just a little confused that when is block 3 for Chennai coming, when is block 4, 5 for Chennai coming, and when is block 5, 6, 7, 8 for Gurugram coming. Just wanted to get an annual visibility.

So, on the Chennai, 1, 2, 3 are already operational. Block 4 and 5 is what is under construction, which is together 3.6 million square feet, which will become operational by calendar next year. And coming on to the downtown Gurugam, which is 5678 and the MOIG, the completion is targeted towards the end of FY28 and FY29. So most of the blocks will become operational between FY29 and FY30.

Understood. And the mall of India Gurugam is also stacked up for FY30? FY30. Understood. Okay, that was my question. Thank you so much.

Thank you. Next question is from the land of Satandar Bedi. Kindly accept the prompt. Unmute your audio. Announce your company name and proceed with your question. Satandar Bedi, we are unable to hear you. Due to no response, we move on to the next participant. Next question is from Shrenika Jain. Kindly accept the prompt. Announce your company name and proceed with your question.

Hi, my question is regarding the revenue. The company name is JP Morgan. The question is regarding the revenue for the first two quarters is still below the market expectations, though launches are very good, marketing expenses, other expenses have shoot up very highly. But the market expectations are still very high, and the revenue is still not meeting up the expectations. When can we see revenues which used to come in the earlier 7-8 quarters before?

Hi, Srinika. Are you talking of accounting revenues or sales? Accounting, revenues, and… Yeah, Srinika, I'll just kind of… Srinika, we follow a completed contract method of accounting, which effectively means when the project is done, is over, is when you receive an OC, then you are able to recognize the revenue in the P&L versus a POCM accounting. Okay, so this, the number of projects which get completed and we are able to offer it to the customers is when possibly this gets recognized. This we have highlighted earlier that our inflection point of revenue, which is almost 75,000 crores of launched and project so far, the inflection point you'll see in 27, 28, and going forward next to four or five years is when this entire revenue is going to get recognized.

The second thing from an accounting revenue standpoint also that you should understand is that for both CyberCity and ADM Place, even though we control 67% and should normally be consolidating their revenues and EBITDA into us, because of certain AVM rights that the minority partners have, the auditors, you know, believe that consolidation should not be, should not be there. So, I mean, if I may say, in a very accounting construct, that the entire revenue of CyberCity is about 2,000 pros a quarter, and Atrium Place is another 150, 150, 150 pros a quarter, is not consolidated, even though we, I mean, we own the majority control in those entities.

And second question is, what is the key reason for other expenses shooting up in this quarter?

So, other expenses includes brokerage, marketing, etc. So, as you understand that, we continue to take into P&L all the overheads which are being incurred to make and develop the projects of future. So, I think those are the overheads which we continue to increase. And in this particular quarter, there's a marginal increase versus previous quarter, but it's kind of in line on an average. It's in line with what generally we have from an overheads perspective. What is the forward guidance for other expenses? It will be in similar range. Average of last two quarters should be looked at for forward guidance as well.

And how do we look towards forward guidance towards other revenues? I mean, every quarter, the other income which comes is always a surprise number. So, how do you look going at three, four quarters for the other income part?

So, Srinik, I think if you go back on the last four, five, six quarters or so, There have been only two quarters where the other income has been slightly on the higher side, and they have got very valid business reasons because of which these other incomes are getting recorded the way they are. The first one was Joyce, which was almost four, five quarters back, which was a settlement which was going on in the company, and that is also from a business outcome, a very positive business outcome, which was struck, and that was included as other income. And in this particular quarter, you have the fair valuation gain, From which is due to accounting, which accounting guidance. Apart from that, on an average, you'll have almost 100 to 200, 150 to 200 crores of other income, which is interest income, interest from other subsidiaries, et cetera, et cetera, which will continue to happen. Okay. Thank you.

Thank you very much. Ladies and gentlemen, we'll take that as a last question. I would now like to hand the conference over to Mr. Ashok Tyagi for closing comments.

Thank you so much. A, I am sorry for dragging all of you on a Saturday early afternoon into this call, but I think because our meeting was on Friday, this became really unavoidable. As Badal explained, in some sense, you know, till the time that Arbor will be commissioned, sometimes next year, this entire thing of the accounting revenue, you know, being dependent on the launches made earlier in the post-Cameleas, but pre-Arbor phase, those will be the key drivers of that, plus any mysterious asset sale, etc., that happened. But this is a small passing phase. Fundamentally, the three key drivers of our business, which is strong pre-sales of the identified products, strong cash and margin generation, and a continuously sustained and strong growth of the rental business, we continue to work and hopefully deliver on all the three engines. You know, the first half, I mean, the first quarter was relatively a quiet period from a pre-sales standpoint. Aureva hopefully should have, you know, started the entire process, and hopefully in the next two quarters, as we mentioned, we should have a couple of more launches, which, apart from the continuing sales of Delia's, which, of course, continues. Our focus continues to be on strong cash management and strong margin generation. The rent co continues to, you know, hopefully grow strong. Atrium has commissioned. I think this is the first year when Atrium will be fully rent generating. Summit Plaza got commissioned in this quarter. Midtown Plaza got commissioned. Downtown, sorry, Promenade Goa should get commissioned hopefully around the Christmas, New Year time frame. So all of these are, you know, long-term rent generating assets which we continue. And our focus continues to be on doing all this with this extremely strong focus on governance and compliance. And I think with that, I mean, look forward to reconnecting back with you guys, hopefully in January. Thank you.

Thank you. Thank you very much. On behalf of DLF Limited, that concludes this conference. Thank you all for joining us. And you may now leave the meeting and disconnect your lines. Thank you all.