1

SYNOPSIS

� DLF Limited is India's largest real

estate company in terms of

revenues, earnings, market

capitalization and developable area.

� DLF to launch second phase of

garden city which is spread into

109 acres, is being developed

adjacent to Phase I.

� During the quarter ended, the

robust growth of Net Profit is

increased by 79.30% Rs.7369.40

million.

� Company has recommended a

dividend of Rs. 2/- per equity share

on the face value of Rs. 2/- each

subject to the shareholders

approval.

� Net Sales and PAT of the company

are expected to grow at a CAGR of

14% and 26% over 2010 to 2013E

respectively.

Years Net sales EBITDA Net Profit EPS P/E

FY 11 29160.80 29716.80 12695.80 7.48 28.21

FY 12E 32951.70 32763.59 13989.37 8.24 25.60

FY 13E 36246.87 36014.48 15415.91 9.08 23.23

Stock Data:

Sector: Real Estate

Face Value Rs. 2.00

52 wk. High/Low (Rs.) 397.35/206.55

Volume (2 wk. Avg.) 927000.00

BSE Code 532868

Market Cap (Rs in mn) 358183.05

Share Holding Pattern

1 Year Comparative Graph

DLF LTD BSE SENSEX

C.M.P: Rs. 211.00 Target Price: Rs. 236.00 Date: June 30th 2011 BUY

DLF Ltd Result Update: Q4 FY 11

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Peer Group Comparison

Name of the company CMP(Rs.) Market

Cap.(Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)

DLF Ltd 211.00 358183.05 7.48 28.21 2.79 100.00

Ahluwalia Contracts 110.50 6935.30 11.28 9.80 2.14 40.00

Ganesh Housing Corpr 134.05 4377.50 17.49 7.66 0.78 18.00

Godrej Properties Ltd 737.00 51479.50 15.20 48.49 5.59 40.00

Investment Highlights

� Q4 FY11 Results Update

DLF Ltd has posted net profit of Rs 7369.40 million for the quarter ended on March

31, 2011 as against Rs 4110.10 million in the same quarter last year, an increase

of 79.30%. It has reported net sales of Rs 8469.60 million for the quarter ended on

March 31, 2011 as against Rs 7819.70 million in the same quarter last year, a rise

of 8.31%. Total income grew by 28.29% to Rs 15285.90 million from Rs.11915.30

million in the same quarter last year. During the quarter, it reported earnings of

Rs.4.34 a share registering growth of 79.28%.

Quarterly Results - Standalone (Rs in mn)

As At Mar-11 Mar-10 %change

Net sales 8469.60 7819.70 8.31

Net Profit 7369.40 4110.10 79.30

Basic EPS 4.34 2.42 79.28

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� Break up of Expenditure

� Board Recommended Dividend

DLF Ltd has recommended a dividend of Rs. 2/- per equity share on the face value

of Rs. 2/- each subject to the shareholders approval.

� Allotment of Shares

DLF Ltd has allotted Equity Shares (face value of Rs. 2/- each) 12,864 under the

Company's Employees Stock Options Scheme.

� DLF launches second phase of Garden City

DLF to launches second phase of garden city which is spread into 109 acres, is

being developed adjacent to Phase I. Phase I is spread over a total area of 192

acres, Garden City, DLF Indore situated at A B Byepass Road has been fast

emerging as a benchmark in township development in Indore.

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Company Profile

DLF Limited is India's largest real estate company in terms of revenues, earnings,

market capitalization and developable area. The company has 399 msf of planned

projects with 56 msf of projects under construction.

The DLF Group was founded in 1946. They developed some of the first residential

colonies in Delhi such as Krishna Nagar in East Delhi, which was completed in 1949.

Since then they have been responsible for the development of many of Delhi’s other

well known urban colonies, including South Extension, Greater Kailash, Kailash

Colony and Hauz Khas.

They commenced acquiring land at relatively low cost outside the area controlled by

the Delhi Development Authority, particularly in the district of Gurgaon in the

adjacent state of Haryana.

This led to our first landmark real estate development project – DLF Qutab Enclave,

which has now evolved into DLF City. DLF City is spread over 3,000 acres in Gurgaon

and is an integrated township, which includes residential, commercial and retail

properties in a modern city infrastructure with schools, hospitals, hotels and shopping

malls. It also boasts of the prestigious DLF Golf and Country Club with night golfing

facilities.

DLF's primary business is development of residential, commercial and retail

properties. The company has a unique business model with earnings arising from

development and rentals. Its exposure across businesses, segments and geographies,

mitigates any down-cycles in the market. DLF has also forayed into infrastructure,

SEZ and hotel businesses.

Businesses

� Development Business

� Annuity Business

� Wind Power Projects

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Financial Results

12 Months Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) FY10 FY11 FY12E FY13E

Description 12m 12m 12m 12m

Net Sales 24192.10 29160.80 32951.70 36246.87

Other Income 8012.20 12426.80 13420.94 14628.83

Total Income 32204.30 41587.60 46372.65 50875.70

Expenditure -13040.50 -11870.80 -13609.05 -14861.22

Operating Profit 19163.80 29716.80 32763.59 36014.48

Interest -8472.40 -12867.00 -13896.36 -15147.03

Gross profit 10691.40 16849.80 18867.23 20867.45

Depreciation -1260.50 -1297.70 -1349.61 -1430.58

Profit Before Tax 9430.90 15552.10 17517.63 19436.87

Tax -1716.50 -3090.50 -3678.70 -4178.93

Profit After Tax 7714.40 12461.60 13838.92 15257.94

Extraordinary Items -63.80 234.20 150.45 157.97

Net Profit 7650.60 12695.80 13989.37 15415.91

Equity capital 3394.80 3395.10 3395.10 3395.10

Reserves 124880.30 134684.80 148523.72 163781.67

Face value 2.00 2.00 2.00 2.00

EPS 4.51 7.48 8.24 9.08

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Quarterly Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) 30-Sep-10 31-Dec-10 31-Mar-11 30-Jun-11E

Description 3m 3m 3m 3m

Net sales 5420.60 8751.70 8469.60 7792.03

Other income 2345.00 1639.20 6816.30 6475.49

Total Income 7765.60 10390.90 15285.90 14267.52

Expenditure -2385.50 -3789.70 -3469.00 -3155.77

Operating profit 5380.10 6601.20 11816.90 11111.74

Interest -3376.60 -3232.30 -3171.00 -3392.97

Gross profit 2003.50 3368.90 8645.90 7718.77

Depreciation -324.20 -331.00 -321.70 -324.92

Profit Before Tax 1679.30 3037.90 8324.20 7393.86

Tax -457.60 -989.70 -1181.60 -1626.65

Profit After Tax 1221.70 2048.20 7142.60 5767.21

Extraordinary Items 5.20 0.20 226.80 10.56

Net Profit 1226.90 2048.40 7369.40 5777.77

Equity capital 3394.90 3395.10 3395.10 3395.10

Face value 2.00 2.00 2.00 2.00

EPS 0.72 1.21 4.34 3.40

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Key Ratios

Particulars FY10 FY11 FY12E FY13E

EBITDA Margin (%) 79.22% 101.91% 99.43% 99.36%

PBT Margin (%) 38.98% 53.33% 53.16% 53.62%

PAT Margin (%) 31.89% 42.73% 42.00% 42.09%

P/E Ratio (x) 46.81 28.21 25.60 23.23

ROE (%) 6.01% 9.02% 9.11% 9.13%

ROCE (%) 8.02% 10.74% 11.00% 11.24%

Debt Equity Ratio 0.99 1.09 1.04 0.99

EV/EBITDA (x) 18.69 12.05 10.93 9.95

Book Value (Rs.) 75.57 81.34 89.49 98.48

P/BV 2.79 2.59 2.36 2.14

Charts:

Net Sales & PAT

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P/E Ratio(x)

Debt Equity Ratio

9

EV/EBITDA(x)

P/BV

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Outlook and Conclusion

At the current market price of Rs.211.00, the stock is trading at 25.60 x FY12E

and 23.23 x FY13E respectively.

Earning per share (EPS) of the company for the earnings for FY12E and FY13E

is seen at Rs.8.24 and Rs.9.08 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 14% and

26% over 2010 to 2013E respectively.

On the basis of EV/EBITDA, the stock trades at 10.93 x for FY12E and 9.95 x

for FY13E.

Price to Book Value of the stock is expected to be at 2.36 x and 2.14 x

respectively for FY12E and FY13E.

We expect that the company will keep its growth story in the coming quarters

also. We recommend ‘BUY’ in this particular scrip with a target price of

Rs.236.00 for Medium to Long term investment.

Industry Overview

The real estate sector in India is of great importance. According to the report of the

Technical Group on Estimation of Housing Shortage, an estimated shortage of 26.53

million houses during the Eleventh Five Year Plan (2007-12) provides a big investment

opportunity.

According to a report ‘Emerging trends in Real Estate in Asia Pacific 2011', released by

PricewaterhouseCoopers (PwC) and Urban Land Institute (ULI), India is the most

viable investment destination in real estate. The report, which provides an outlook on

Asia-Pacific real estate investment and development trends, points out that India, in

particular Mumbai and Delhi, are good real estate investment options for 2011.

Residential properties maintain their growth momentum and hence are viewed as

more promising than other sectors. ULI is a global non-profit education and research

institute.

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Further, real estate companies are coming up with various residential and commercial

projects to fulfill the demand for residential and office properties in Tier-II and Tier-III

cities. For instance, Ansal Properties has several residential projects in cities such as

Jodhpur, Ajmer, Jaipur, Panipat, Kundli and Agra. Omaxe has also planned around

40 residential and integrated township projects in Tier-II and Tier-III cities, majority of

them being in Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan and Haryana. The

growth in real estate in Tier-II and Tier-III cities is mainly due to increase in demand

for organized realty and availability of land at affordable prices in these cities.

According to the data released by the Department of Industrial Policy and Promotion

(DIPP), housing and real estate sector including cineplex, multiplex, integrated

townships and commercial complexes etc, attracted a cumulative foreign direct

investment (FDI) worth US$ 9,405 million from April 2000 to January 2011 wherein

the sector witnessed FDI amounting US$ 1,048 million during April-January 2010-11.

New Projects

� Private equity fund IL&FS Investment Managers (IIML) is estimated to have

invested US$ 300 million in real estate and urban infrastructure projects in

2010.

� Close to Nalagarh in Solan district, Dabhota is set to be the latest industrial

area to be developed by the Himachal Pradesh government, say officials. The

state government has already issued a notification and asked the state land

acquisition officials to acquire 2,020 bighas of land at Baghota to be developed

into industrial plots.

� Ramky Estates and Farms Limited, the real estate arm of the Ramky Group, is

contemplating to enter Indian market by July 2011. The company is evaluating

on land acquisitions in Kolkata and Bhubaneswar.

� Chennai-based VGN Developers Pvt Ltd has entered into a joint venture with

private equity firm Pragnya Fund to initiate a new residential project with an

investment of US$ 20.06 million in the city.

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� Ascendas has entered into an agreement with a Japanese consortium of Mizuho

Corporate Bank (MCB) and JGC Corporation to develop integrated townships in

India, according to a press release from Ascendas. The integrated township is

likely to be in Chennai, which has attracted investment by a number of

companies from Japan. Ascendas of Singapore will be the master developer.

� Godrej Group's real estate company, Godrej Properties and Frontier Home

Developers, has launched a residential project in Gurgaon with joint venture

partner M/s. Frontier Home Developers Pvt. Ltd. This is a debut residential

project in the national capital region (NCR) for Godrej Properties.

� Shristi Infrastructure Development Corporation will invest US$ 444.7 million

over the next three years in seven small cities in West Bengal, Tripura and

Rajasthan. The money would be used to build integrated townships, healthcare

facilities, hospitality and sports facilities, retail malls, logistics hubs and

commercial and residential complexes.

� Realty major Ansal Properties & Infrastructure Ltd plans to invest about US$

330.8 million over the next three years on expansion of its existing integrated

townships and to develop a group housing project in Haryana.

� Vision India Real Estate, a closely-held business group in the US, is investing

US$ 5 million in Gem Group's upcoming residential project in Chennai. This

will be the first joint development project for the US company that is proposing

to invest US$ 100 to US$ 200 million over the next three years on projects,

especially in the logistics arena.

� Realty major Embassy Property Developments has entered into a joint venture

with MK Land Holding, a Malaysian company that specializes in pre-fabricated

affordable housing, to build projects in the affordable housing segment. The

proposed project entails an investment of over US$ 1.2 billion.

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� Thai real estate developer Pruksa Global plans to invest US$ 218 million in

projects in India and launched its first residential project in the country at

Bangalore in October 2010.

� The International Finance Corporation (IFC) is in talks with several real estate

developers to create large affordable housing projects in India. For FY-09 and

FY-10 (fiscal year ending June 30), IFC's highest exposure has been in India.

Out of the US$ 3.5 billion that IFC has committed in India, US$ 2.5-2.6 billion

have been disbursed. IFC will continue to invest roughly US$ 1 billion in India

every year for the next two or three years.

Government Initiatives

The government has introduced many progressive measures to unlock the potential of

the sector and also to meet the increasing demand levels.

� 100 per cent FDI allowed in townships, housing, built-up infrastructure and

construction development projects through the automatic route, subject to

guidelines as prescribed by DIPP

� 100 per cent FDI is allowed under the automatic route in development of

Special Economic Zones (SEZ), subject to the provisions of Special Economic

Zones Act 2005 and the SEZ Policy of the Department of Commerce

� FDI is not allowed in Real Estate Business

In his 2011-12 Union Budget proposal speech, the Finance Minister Pranab

Mukherjee has extended good news for real estate firms focused on affordable

housing.

� He proposed raising the limit on housing loans eligible for a 1 per cent subsidy

in interest rates.

� Widened the scope for housing under "priority-sector lending" for banks,

making interest rates cheaper on them.

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� The government earmarked a substantial amount to the Urban Development

Ministry for spending on extension of Metro networks in Delhi, Bangalore and

Chennai.

� The urban infrastructure development project has been allocated US$ 20.03

million.

� Urban Development Ministry has got total US$ 1.5 billion, an increase of US$

68.53 million from the last fiscal 2010-11.

� The allocation for Bharat Nirman has been hiked to US$ 12.89 billion. Bharat

Nirman consists of 6 flagship programs, the Pradhan Mantri Gram Sadak

Yojana (PMGSY), Accelerated Irrigation Benefit Program, Rajiv Gandhi Grameen

Vidyutikaran Yojana, Indira Awas Yojana, National Rural Drinking Water

Program and Rural telephony.

The relaxed FDI rules implemented by Indian government have attracted more foreign

investors and real estate in India. The revised investor friendly policies allowed

foreigners to own property, and dropped the minimum size for housing estates built

with foreign capital to 25 acres (10 hectares) from 100 acres (40 hectares). The

overseas firms welcomed these modifications and they can now put up commercial

buildings as long as the projects surpass 50,000 square meters (538,200 square feet)

of floor space.

Road Ahead

According to the Confederation of Real Estate Developers' Associations of India

(CREDAI), the affordable housing segment is set to play an important role in India's

real estate sector in 2011 on the back of substantial demand ignited by economic

recovery.

"Affordable housing will be a key factor in driving the sector and we have already

started working on progressive solutions in this area for effective and customized

implementation of such projects," CREDAI Chairman Kumar Gera said.

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Moreover, 2011 is expected to be a positive year for the real estate sector. The revival

is expected to be driven by infrastructure growth, which in turn, can accelerate real

estate activities both in the residential as well as commercial spaces.

______________ ____ _________________________ Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation

for the purchase or sale of any financial instrument or as an official confirmation of any

transaction. The information contained herein is from publicly available data or other

sources believed to be reliable but do not represent that it is accurate or complete and it

should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s

affiliates shall not be in any way responsible for any loss or damage that may arise to any

person from any inadvertent error in the information contained in this report. This document

is provide for assistance only and is not intended to be and must not alone be taken as the

basis for an investment decision.

16

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