Realty stocks were in the news in recent days as they have again come back into favour with mutual fund managers. And with foreign institutional investors ploughing money back into the Indian markets, could DLF be far from making the largest moves in the sector?
The biggest realty company in India is back on the front pages again with reports that it is said to be in discussions with FIIs over a stake sale. The possibility of the involvement of some domestic institutional investors too has acquired credence.
With a share price of between Rs 220 and Rs 230, the KP Singh-owned DLF is looking to garner over Rs 2,500 crore – the stock closed on Thursday at Rs 245.
While the amount of equity that will be shed is large, yet with the Singh family controlling some 88.5 per cent of the stake (Indian mutual funds hold 0.6%, FIIs hold over 6% and free-float is over 4% approximately), the dilution will not be ringing any alarm bells for the investors.
The funds derived thereof are likely funneled into DLF Assets (DAL) to pay for land bought earlier – in essence the company is finding it hard to fund these on its own.
The company has suffered from the effects of the slowdown reporting an over 90% fall in net profits in the wake of home purchasers refusing to buy into the realty story at the levels reached last year and the story is repeating in 2009 too. With DLF and other realty majors giving sops aplenty and even cutting prices, the recovery is not looking to happen.