DLF faces growth challenges amid real estate market slowdown

DLF Ltd is facing challenges in its sales growth prospects for the next couple of years. The company’s share prices have decreased by 18.5% in the past year. This is significantly lower than the overall performance of the Nifty Realty index, which has remained flat. Investors are concerned about a potential slowdown in the real estate market, which could affect DLF due to poor economic conditions. Despite these challenges, DLF has seen positive pre-sales figures. The company reported pre-sales of ₹19,187 crore in the first nine months of the fiscal year, exceeding its annual target of ₹17,000 crore. DLF recently launched a luxury project called ‘The Dahlias’ in Gurugram, which has generated interest among potential buyers. Looking ahead, DLF is expected to provide guidance for FY26 during its upcoming quarterly results announcement. The company has a pipeline of ongoing and planned projects worth ₹1.14 trillion, with 35% already launched. DLF aims to launch additional projects worth around ₹17,000 crore in FY26. In its future plans, DLF is targeting a gross margin of over 45% from its development business. The company also intends to eliminate its group net debt by FY30. Currently, DLF’s net debt stands at ₹14,679 crore, down from ₹24,028 crore in FY21. DLF aims to increase its dividend payout ratio to about 50% of its profit after tax over time. In its annuity business, the company expects annual rental income to reach ₹10,000 crore by FY30. However, executives remain cautious and want to conserve cash for potential downturns while making strategic investments when necessary. Despite recent stock performance, DLF’s improving cash generation and decreasing debt are seen as positive signs. Analysts believe that the launch of a project in Mumbai could provide a potential boost in the near term.