Dahlias project sets the stage for DLF’s rosy FY25 exit
Source: Live Mint
Realty firm DLF Ltd’s FY25 pre-sales target of ₹17,000 crore was certainly a tall order, as the first half of FY25 was marred by muted new launches and weak sales in existing projects. But the launch of the uber-luxury project ‘The Dahlias’ at Golf Course Road in Gurugram in the December quarter (Q3FY25) changed everything.
The project has 420 units spanning around 4.5 million square feet (msf). DLF has sold 173 units at an average selling price of around ₹65,000 per square foot. The project garnered bookings worth ₹11,816 crore in Q3 amid the overwhelming response, almost entirely driving the quarter’s pre-sales. This pushed DLF’s pre-sales to ₹19,187 crore in the first nine months of FY25, surpassing its FY25 target.
The ongoing demand momentum for luxury projects in DLF’s key Gurugram micro market, coupled with its premium brand positioning, drove sales in The Dahlias. Over 50% of the demand in Dahlias was led by the existing Golf Links community and NRIs contributed 12% to the sales, the management said in the Q3 earnings call.
DLF expects to monetize the Dahlias project fully in three years. The project’s remaining inventory will be priced higher. Thanks to Dahlias, DLF is now in for a solid FY25 exit. Analysts at Jefferies India have raised DLF’s FY25 pre-sales estimates by 15% to ₹23,000 crore.
However, given the high base in FY25 and the exhaustion of ready-to-move inventory of housing units, timely and steady new project launches are crucial for DLF to maintain its pre-sales trajectory. DLF has increased its project pipeline to ₹44,100 crore for FY25 and beyond FY25 to ₹70,400 crore versus ₹63,500 crore indicated in Q2FY25.
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In Q4FY25, its first residential project launch in Mumbai will be a key monitorable. Remember, DLF had invested a 51% stake in an SPV that will undertake a slum rehabilitation project in Andheri west. Around 0.9 msf space is expected to be launched in Q4FY25 in phase 1 and the overall potential is around 5 msf. Since a large part of DLF’s projects are currently located in the National Capital Region, expansion into newer geographies reduces the concentration risk and also provides new growth potential.
The Mumbai project is likely to be followed by the launch of a new phase in DLF Privana and the super-luxury project in Goa in Q1FY26. “We currently factor pre-sales of ₹24,000 crore in FY2026E that will likely be supported by sustenance sales of Dahlias ( ₹23,000 crore inventory) and launches in Goa ( ₹3000 crore), Mumbai ( ₹3500 crore), Privana ( ₹6000 crore), as well as potential launches of IREO, which has a sales potential of ₹20,000 crore,” said Kotak Institutional Equities report dated 27 January. DLF will release its FY26 pre-sales guidance in Q4.
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In the commercial portfolio, occupancy of operational assets stood sequentially flat at 93% in Q3, but DLF saw a sharp improvement in occupancy from Q4FY25/FY26 onwards. New phases of Downtown, Gurugram, and Downtown, Chennai are set to become operational over Q4FY25-27, aiding rental income. Robust cash collections including rentals, helped DLF improve net cash position to ₹4, 500 crore as of December, from ₹2,800 crore in September.
A strong balance sheet gives legroom for project expansions, but stock revival hinges on pre-sales and launches. The DLF stock has fallen by 20% so far in FY25, even as it has gained 6% post Q3 results.
“Lease business is also set for 20%+ income uptick in FY26 as several properties complete. Stock trading at below 25% NAV discount, which we believe adequately discounts risks of potential mid-cycle slowdown,” added the Jefferies report dated 27 January.
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