DLF: Higher interest costs dent profits - Views on News from Equitymaster

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DLF: Higher interest costs dent profits

Jan 30, 2008

Performance summary
  • 3QFY08 topline grows 11% QoQ (it being the third quarterly result post listing, the YoY figures are not available).
  • Operating margins contracts by 0.5% QoQ during the quarter – higher construction costs impact the same.

  • PAT grows by 6% QoQ largely impacted by lower other income and higher interest costs.

(Rs m) 2QFY08 3QFY08 Change
Sales 32,499 35,984 10.7%
Expenditure 9,863 10,970 11.2%
Operating profit (EBDITA) 22,637 25,014 10.5%
Operating profit margin (%) 69.7% 69.5%  
Other income 993 528 -46.8%
Interest 36 788 2064.0%
Depreciation 110 148 35.1%
Profit before tax 23,484 24,606 4.8%
Tax 3,301 3,218 -2.5%
Minority interest 9 4  
Share in associates 6 57  
Profit after tax/(loss) 20,186 21,450 6.3%
Net profit margin (%) 62.1% 59.6%  
No. of shares (m) 1,704.8 1,705.2  
Diluted earnings per share (Rs) *   44.4  
P/E ratio (x) *   20.0  
* On 9mFY08 annualised earnings

What to expect?
At the current price of 881, the stock is trading at a multiple of 14.1 times our estimated FY10 earnings. We had recommended a ‘Hold’ on the stock in December 2007 at Rs 1,021 with a March 2010 target prices of Rs 1,380. The stock went up 20% from our recommendation to a high of Rs 1,225 but has since then declined mainly due to the broader market contraction. We, thus, maintain our positive view on the stock. We will put up a detailed analysis of the result post the conference call that is scheduled for February 1, 2008.

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Dec 12, 2019 (Close)