DLF’s woes continues as shares hit three year low

Already in doldrums over heavy debt burden and decreased profit margin year-on-year, realty major DLF’s shares have further slipped over seven per cent to hit its three-year low of Rs 169.55 in early trade on Monday in  a weak market.

At 10:35 a.m., the stock was trading four per cent lower at Rs 175.20. It has hit a low of Rs 169.55 and a high of Rs 186 so far.

Last month, India's largest real estate developer reported a 38.6 percent drop in net profit for the quarter ended March 31, 2012, to Rs 211.7 crore from Rs 344.54 crore in the year-ago period. Income for the quarter declined to Rs 2,747.45 crore from Rs 2,869.72 crore in the March 2011 quarter, an Economic Times report said.

"Net profit declined on the back of margin compression, higher interest costs, lower other income and tax adjustments," Angel Broking said in a report. "Interest cost increased by 32.5 percent Y-o-Y to Rs 604 crore, while other income declined by 30 percent YoY to Rs 131 crore," the report added.

In an analyst presentation, DLF said it expects to raise up to Rs 4,000 crore from the sale of non-core assets in the next six months. It is looking to sell its luxury hotel business, Aman Resorts, wind energy assets and a prime land plot in Mumbai.

"DLF will close the sale of Aman Resorts, a Mumbai land and its wind power business in the next six months and has set itself an additional target of Rs 5,000 crore through the sale of non-core assets in the medium term," the report further said.

The firm's management said the company managed to raise Rs 1,774 crore through the sale of non-core assets in fiscal 2011-12 against a target of Rs 5,000-6,000 crore.

"The company has been trying to sell non-core assets to reduce debt that stood at Rs 22,725 crore at the end of Q4 2012. It reduced debt by Rs 33 crore in the quarter. High finance costs resulted in the company's net profit dropping 38.6 percent in the last quarter of the fiscal year," the report noted.