1

SYNOPSIS

DLF Limited is India's largest real

estate company in terms of revenues,

earnings, market capitalization and

developable area for over 60 years.

During the quarter ended, the robust

growth of Net Sales is increased by

20.57% Rs. 24458.20 million.

DLF has become a preferred name

with many IT & ITES majors and

leading Indian and International

corporate giants.

Net Sales and Operating Profit of the

company are expected to grow at a

CAGR of 17% and 8% over 2010 to

2013E respectively.

DLF Foundation, the CSR arm of the

country’s largest realty firm DLF will

invest Rs 200 crore to establish 250

centres for skill training of one

million unemployed youth.

Years Net sales EBITDA Net Profit EPS P/E

FY 11 95605.70 43365.50 16396.10 9.66 21.13

FY 12E 106122.33 45289.05 16196.12 9.54 21.39

FY 13E 117795.78 50105.97 18090.17 10.66 19.15

Stock Data:

Sector: Realty

Face Value Rs. 2.00

52 wk. High/Low (Rs.) 396.35/173.40

Volume (2 wk. Avg.) 1227000.00

BSE Code 532868

Market Cap (Rs in mn) 346469.95

Share Holding Pattern

1 Year Comparative Graph

DLF LTD. BSE SENSEX

C.M.P: Rs. 204.00 Target Price: Rs. 230.00 Date: Oct. 4th 2011 BUY

DLF Ltd. Result Update: Q1 FY 12

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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. 204.00 346469.95 9.66 21.13 1.41 100.00 Ansal Housing and

Construction Ltd. 38.00 77.41 18.69 2.03 0.25 8.00

Puravankara Projects 63.00 1344.57 3.28 19.21 0.91 0.00

Arihant Foundation 70.95 61.02 2.43 29.2 0.40 10.00

Investment Highlights

� Q1 FY12 Results Update

DLF Ltd. has reported net profit of Rs 3583.60 million for the quarter ended on

June 30, 2011 as against Rs. 4110.30 million in the same quarter last year, a

decrease of 12.81%. It has reported net sales of Rs 24458.20 million for the quarter

ended on June 30, 2011 as against Rs 20285.30 million in the same quarter last

year, a rise of 20.57%. Total income grew by 15.86% to Rs 25032.30 million from

Rs.21606.30 million in the same quarter last year. During the quarter, it reported

earnings of Rs 2.11 a share.

Quarterly Results – Consolidated (Rs in mn)

As At June-11 June-10 %change

Net sales 24458.20 20285.30 20.57%

PAT 3583.60 4110.30 -12.81%

Basic EPS 2.11 2.42 -12.82%

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• Break up of Expenditure

� Allotment of Equity Shares under ESOP

DLF Ltd has allotted 248,358 Equity Shares at a face value of Rs. 2/- each upon

exercise of Options by the employees under the Company's Employees Stock

Options Scheme.

� DLF Foundation to set up 250 skill training centres

DLF Foundation, the corporate social responsibility arm of the country’s largest

realty firm DLF will invest Rs 200 crore to establish 250 centres for skill training of

one million unemployed youth. These centres will provide training in fields like

construction, IT, retail, marketing, customer relations, hospitality and electronics,

among others, with assured employment linkages.

Company Profile

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

market capitalization and developable area. It has over 60 years of track record of

sustained growth, customer satisfaction, and innovation. The company has 406 msf of

planned projects with 57 msf of projects under construction.

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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.

Development Business

The development business of DLF includes Homes and Commercial Complexes

The Homes business caters to 3 segments of the residential market - Super Luxury,

Luxury and Mid-Income. The product offering involves a wide range of products

including condominiums, duplexes, row houses and apartments of varying sizes.

DLF is credited with introducing and pioneering the revolutionary concept of

developing commercial complexes in the vicinity of residential areas. DLF has

successfully launched commercial complexes and is in the process of marking its

presence across various locations in India.

The development business at present has 307 msf of development potential with 41

msf of projects under construction.

Annuity Business

The annuity business consists of the rental businesses of offices and retail.

With over six decades of excellence, DLF is a name synonymous with global standards,

new generation workspaces and lifestyles. It has the distinction of developing

commercial projects and IT parks that are at par with the best in the world. DLF has

become a preferred name with many IT & ITES majors and leading Indian and

International corporate giants, including GE, IBM, Microsoft, Canon, Citibank, Vertex,

Hewitt, Fidelity Investments, WNS, Bank of America, Cognizant, Infosys, CSC,

Symantec and Sapient, among others.

DLF pioneered the retail revolution in the country and brought about a paradigm shift

in the industry by redefining shopping, recreation and leisure experiences with

the launch of City Centre in Gurgaon in 2000. The Retail Malls business is a major

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thrust area for DLF. Currently, DLF is actively creating new shopping and

entertainment spaces all over the country.

The company has land resource of 89 msf for office and retail development, with 16

msf of projects under construction.

DLF owns and operates the luxurious Aman Resorts across the world and also has an

alliance with Hilton Group for development and management of hotels in India. The

hotel business is currently undergoing a comprehensive review by the company as

regards its future plans, commitment towards resources and the extent of scale and

size that the company aspires to achieve in this segment. DLF has a

development potential of 11 msf for its hotel business.

DLF has a strong management team running independent businesses, though

complementing each other in cases of opportunities of mixed land

use. DLF's mission is to build a world-class real estate development company with the

highest standards of professionalism, ethics and customer service and to

thereby contribute to and benefit from the growth of the Indian economy.

Business Divisions

The company’s business is spread across different divisions:

� Office-Commercial

� Home-Residential

� Shopping Mall

� Retail

� SEZ's

� Hotels

� Infrastructure

� Leisure

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Financial Results

12 Months Ended Profit & Loss Account (Consolidated)

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

Description 12m 12m 12m 12m

Net Sales 74228.70 95605.70 106122.33 117795.78

Other Income 4280.30 5838.80 3795.22 3871.12

Total Income 78509.00 101444.50 109917.55 121666.91

Expenditure -39113.00 -58079.00 -64628.50 -71560.94

Operating Profit 39396.00 43365.50 45289.05 50105.97

Interest -11100.40 -17056.20 -19273.51 -21200.86

Gross profit 28295.60 26309.30 26015.54 28905.11

Deprecation -3249.30 -6307.20 -6937.92 -7492.95

Profit Before Tax 25046.30 20002.10 19077.62 21412.16

Tax -7022.50 -4594.10 -3815.52 -4282.43

Profit After Tax 18023.80 15408.00 15262.10 17129.73

Extraordinary Items -941.50 972.20 923.59 951.30

Minority interest 107.90 -72.40 -79.64 -83.62

Share of Profit & Loss of Asso. 8.20 88.30 90.07 92.77

Net Profit 17198.40 16396.10 16196.12 18090.17

Equity capital 3394.80 3395.10 3395.10 3395.10

Reserves 241518.90 241536.50 256798.60 273928.33

Face value 2.00 2.00 2.00 2.00

EPS 10.13 9.66 9.54 10.66

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Quarterly Ended Profit & Loss Account (Consolidated)

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

Description 3m 3m 3m 3m

Net sales 24799.30 26830.90 24458.20 26659.44

Other income 1143.00 1866.30 574.10 602.81

Total Income 25942.30 28697.20 25032.30 27262.24

Expenditure -13019.50 -20168.80 -13348.50 -16208.94

Operating profit 12922.80 8528.40 11683.80 11053.30

Interest -4277.20 -4557.00 -4964.10 -5261.95

Gross profit 8645.60 3971.40 6719.70 5791.36

Depreciation -1612.10 -1657.10 -1701.90 -1752.96

Profit Before Tax 7033.50 2314.30 5017.80 4038.40

Tax -2025.90 -155.50 -1278.40 -767.30

Profit After Tax 5007.60 2158.80 3739.40 3271.11

Extraordinary Items 0.00 937.30 -31.70 -32.33

Minority interest -284.10 312.30 -165.60 0.00

Share of Profit & Loss of Asso -2.00 37.00 41.50 0.00

Net Profit 4721.50 3445.40 3583.60 3238.77

Equity capital 3395.10 3395.10 3395.10 3395.10

Face value 2.00 2.00 2.00 2.00

EPS 2.78 2.03 2.11 1.91

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Key Ratios

Particulars FY10 FY11 FY12E FY13E

No. of Shares (in Million) 1697.40 1697.55 1697.55 1697.55

EBITDA Margin (%) 53.07% 45.36% 42.68% 42.54%

PBT Margin (%) 33.74% 20.92% 17.98% 18.18%

PAT Margin (%) 24.28% 16.12% 14.38% 14.54%

P/E Ratio (x) 20.14 21.13 21.39 19.15

ROE (%) 7.36% 6.29% 5.87% 6.18%

ROCE (%) 9.24% 10.25% 10.20% 10.63%

Debt Equity Ratio 0.89 0.98 0.97 0.95

EV/EBITDA (x) 8.79 7.99 7.65 6.91

Book Value (Rs.) 144.29 144.29 153.28 163.37

P/BV 1.41 1.41 1.33 1.25

Charts:

Net sales & PAT:

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P/E Ratio(x):

Debt Equity Ratio:

10

EV/EBITDA(x):

P/BV:

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Outlook and Conclusion

• At the current market price of Rs.204.00, the stock is trading at 21.39 x FY12E

and 19.15 x FY13E respectively.

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

is seen at Rs.9.54 and Rs.10.66 respectively.

• Net Sales and Operating Profit of the company are expected to grow at a CAGR

of 17% and 8% over 2010 to 2013E respectively.

• On the basis of EV/EBITDA, the stock trades at 7.65 x for FY12E and 6.91 x for

FY13E.

• Price to Book Value of the stock is expected to be at 1.33 x and 1.25 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.230.00 for Long term investment.

Industry Overview

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The real estate sector in India is on a growth path. The development in the real estate

market encompasses growth in both commercial and residential spheres. Further, it

has been estimated that there would be shortage of 26.53 million houses during the

Eleventh Five Year Plan (2007-12), which provides a big investment opportunity,

according to a report by the Technical Group on Estimation of Housing Shortage. The

popularity of the Indian real estate sector is also highlighted by a report ‘Emerging

trends in Real Estate in Asia Pacific 2011’ published by PriceWaterhouseCoopers and

Urban Land Institute. The report focuses on various places where developers such as

Ansal Properties and Omaxe are building commercial and residential developments.

These places include Jodhpur, Agra, Punjab, Uttar Pradesh, Haryana, Madhya

Pradesh, and Rajasthan among others.

Indian Real Estate: Investments

During 2010-11, the Indian real estate and housing sectors received US$ 1.12 billion

in foreign direct investment (FDI), according to the Department of Industrial Policy and

Promotion India (DIPP).

Further, the industry also witnessed growth in private equity (PE) investments as well.

Around 20 deals worth US$ 1.32 billion took place during January-May 2011, as

compared to 22 deals worth US$ 483 million during the same period last year,

according to Venture Intelligence, a research service focused on PE and mergers and

acquisitions (M&A).

Some of the major deals that were undertaken during the first five month of the

current calendar year include investment of US$ 320 million by Jeff Morgan Capital in

Compact Disc India’s film city project, investment of US$ 318 million by Warburg

Pincus in Oceanus Real Estate and Ascendas India’s investment of US$ 190 million in

Phoenix Infocity. Further, US$ 86 million was invested by Tata Realty in Peepul Tree

Properties.

Indian Real Estate: Major Developments

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• Phoenix Group, an infrastructure company, plans to invest around US$ 44.68

million in six real estate ventures in Hyderabad.

• Mumbai-based infrastructure and real estate company Atlanta is looking for a

partner to buy 26 per cent stake in a US$ 2.12 billion entertainment township

project it is developing at Suvali near Surat in Gujarat.

• Patel Realty India Ltd, a wholly-owned subsidiary of Mumbai-based publicly-

held Patel Engineering Group, plans to launch 3-3.5 million sq ft of projects

valued around US$ 66.48 million during 2010-11 across the country.

• Phadnis Group plans to invest US$ 176.68 million in sectors such as real

estate, hospitality and infrastructure in the next three years.

• Shapoorji Pallonji Group has floated a US$ 500 million private equity (PE) fund,

mainly focussed on real estate.

• India Property Fund, managed by NRI investor Purnendu Chatterjee's TCG Real

Estate and US-based Vornado Realty Trust, will be investing US$ 60.32 million

in two residential developments in national capital region (NCR) and Mumbai.

• Real Estate Company Ambuja Realty is planning to set up three more tourist

resorts in West Bengal and Sikkim on the lines of the Ganga Kutir model in

West Bengal.

• Real estate industry has grown to over US$ 2.49 billion in Chhattisgarh with

the state government collecting revenue of US$ 181.65 million from stamp duty

and registration fee on land transactions.

• Real estate developer DLF has decided to develop its US$ 226.18 million

Infopark project spread over 54 acres comprising of an IT block, a luxury hotel,

a retail chain, service apartments and recreational facilities in three phases.

• The Government of Punjab has approved the master plans for the planned

development of eight towns - Sultanpur Lodhi, Hoshiarpur, Tran Taran,

Sangrur, Bhaga Purana, Rama Mandi, Kotkapura and Fatehgarh Sahib.

• DBS Affordable Home Strategy Ltd, in association with SAATH, a non-

government organisation, will launch a 3,800 residential housing project in US$

8,985-US$ 22,464 bracket under the brand name 'Umang Vinzhol' in

Ahmedabad.

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• Puravankara Projects Ltd has announced US$ 379.68 million luxury residential

project at Pallikaranai in the suburbs of Chennai.

• Chennai-based real estate developer, True Value Homes India Pvt Ltd (TVH),

plans to invest around US$ 178.39 million over the next three years to develop

around 12 projects, majority of which will be in the residential segment.

• Tata Housing Development Company Ltd plans to invest nearly US$ 22.22

billion in developing another 40 million sq ft of housing across India in the next

three years, including around US$ 77.80 million in low-cost and affordable

housing.

Indian Real Estate: Government Initiatives

The Government has undertaken various initiatives to help the sector grow in the

recent past. Some of the major government initiatives include:

• Allowing 100 per cent FDI in townships, housing, built-up infrastructure and

construction development projects through the automatic route, subject to

guidelines as prescribed by DIPP

• Allowing 100 per cent FDI 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

In the Union Budget 2011-12, Mr Pranab Mukherjee, Union Finance Minister

presented various initiatives for the real estate sector, especially focusing on affordable

housing. Some of these initiatives include:

• Raising the limit on housing loans eligible for a 1 per cent subsidy in interest

rates

• Widening the scope for housing under "priority-sector lending" for banks,

making interest rates cheaper on them

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• Earmarking substantial amount to the Urban Development Ministry for

spending on extension of Metro networks in Delhi, Bangalore and Chennai

• Allocating US$ 20.03 million for the urban infrastructure development project.

The Urban Development Ministry received US$ 1.5 billion, an increase of US$

68.53 million from the last fiscal 2010-11.

• Increasing allocation for Bharat Nirman 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.

Indian Real Estate: Road Ahead

The affordable housing segment is expected to play an important role in the growth of

the real estate sector in India in 2011, on the back of increasing demand for such

housing, according to the Confederation of Real Estate Developers' Associations of

India (CREDAI).

"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 customised

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

Further, growth in the infrastructure sector is also expected to accelerate real estate

activities, in commercial as well as residential segments, during this year.

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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.

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