Block Deal: DLF Shares Fall 4%, After Promoters Sell Stake Worth ₹1,086 Crore

DLF Ltd., a major real estate company, experienced market turbulence as its promoters executed a significant block deal, selling a 0.87% stake worth ₹1,086 crore. The deal involved offering 2.15 crore shares at a 3% discount to the previous day's closing price, affecting the stock's value. However, despite this turbulence, DLF's stock has shown an impressive 31.66% increase this year.

Bulk Deal Details

During Tuesday's morning trade, DLF Limited, a Gurugram-based real estate giant, experienced a 4% drop in its share price following reports of a block deal. The stock opened at ₹509.50, down from the previous day's closing price of ₹518.75, and further declined to ₹498.45 on the National Stock Exchange (NSE).

The spotlight was on DLF as its promoter group sold 0.87% stake in the company through a substantial block deal, intending to raise at least ₹1,086 crore. The offering consisted of 2.16 crore shares being made available at a price of ₹503 per share, representing a 3% discount to the company's previous day's closing price.

The transaction may lead to a slight increase in DLF's weight in the FTSE index, potentially resulting in an inflow of $5.5 million. However, no immediate impact is expected in the near term in the MSCI index.

The stock of DLF has demonstrated a remarkable performance year-to-date, registering an impressive return of 31.66%. Investors have been pleased with the company's stock performance, which has outperformed many other investments during this period. This substantial return reflects the company's strong financial performance and positive market sentiment toward its business operations. 

Q1FY24 Earnings Report

In terms of financial performance, DLF reported a consolidated net profit of ₹526.11 crore for the quarter ended June 2023, showing growth from Rs 469.21 crore in the corresponding quarter of the previous year. The total income in the April-June quarter was ₹1,521.71 crore, slightly higher compared to ₹1,516.28 crore in the same quarter last year.

Investor Recommendations

Analysts have been closely monitoring the situation, and according to Bloomberg data, 17 out of 20 analysts tracking the company maintains a 'buy' rating, while two recommend a 'hold,' and one suggests a 'sell.' 

After the positive Q1 earnings report, several prominent institutions have recommended buying DLF shares. HDFC Securities suggested purchasing DLF with a target price of ₹576 per share, while ICICI Securities maintained the same rating on the stock, with a target price of ₹532 per share. Nuvama Institutional Equities also advised buying the stock, but its initial target has already been met.

DLF also announced its re-entry into the Mumbai property market and revealed plans to launch close to nine lakh square feet (sq ft) of space in Andheri West by the end of the fiscal year. This project is being undertaken in collaboration with its partner, Trident Group, and is part of the first phase of a larger project in Mumbai.

To develop the entire project, which has a potential saleable area of 30 to 35 lakh sq ft, DLF intends to invest close to ₹400 crore as equity, as disclosed during an investor call on July 24.

About Company

DLF Ltd is a prominent real estate development company, involved in various aspects of the real estate business, such as land acquisition, project planning, construction, marketing, leasing, power generation, and hospitality services. Founded by Chaudhary Raghvendra Singh in 1946, DLF's first project was the development of urban colonies in Delhi, and it has since expanded to Gurugram and other cities. 

As the largest publicly listed real estate company in India, DLF operates residential, commercial, and retail properties in 15 states and 24 cities across the country.