"DLF Limited

Q4 & FY '24 Earnings Conference Call"

May 14, 2024









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DLF Limited

May 14, 2024


Ladies and gentlemen, good day, and welcome to DLF Limited Q4 FY'24 Earnings Conference

Call. We have with us today on the call Mr. Ashok Tyagi - Managing Director and CFO, DLF

Limited; Mr. Sriram Khattar - Vice Chairman and Managing Director, Rental Business;

Mr. Aakash Ohri - Joint Managing Director and Chief Business Officer.

As a reminder, all participant lines will be in the listen only mode and there will be an

opportunity for you to ask questions after the presentation concludes. Should you need assistance

during the conference call, please signal an operator by pressing "*" and then "0" on your

touchtone phone.

Please note that this conference is being recorded. I now hand the conference over to Mr. Ashok

Tyagi. Thank you, and over to you, sir.

Ashok Tyagi:

Okay. Thank you. Good afternoon, everyone. Welcome to DLF Limited's Analyst Call for the

quarter and year ended March 31st 2024. As you may have seen from our analyst presentation

that was circulated last evening, this has been one more quarter of reasonably solid and strong

growth. Our pre-sales for the last year have again been in the vicinity of Rs. 15,000 crores, thus

maintaining now two back-to-back years of Rs. 14,500 crores to Rs. 15,000 crores sales level.

Our PAT for the quarter was Rs. 900 crores and for the full year, the consolidated PAT is

Rs. 2,700 crores, which again is a very strong number and I think the most heartening is that the

free operating cash flow for the year is now running at about Rs. 4,300 crores for the last fiscal

year and we are now very solidly in the positive cash territory and ended the last 31st March

with a net positive cash balance of Rs. 1,500 crores plus, which hopefully should keep on

growing. I mean, we are clearly looking at the existing markets, in terms of the depth that they

have, which has surprised us extremely positively. The launches that Aakash has led have been

successful almost now without fail and I think basis the strength of what we have achieved so

far, we are clearly looking at a strong growth in the next fiscal and hopefully targeting a sales

guidance of Rs. 17,000 crores for Fiscal 2024-25.

With the development business, the rental business has continued to have an extremely solid

year all through. The total rentals for the last year have been Rs. 4,400 crores plus, which are

stated to grow significantly this year. Our growth pipeline in terms of CAPEXs is very strong

with the Downtown coming up in Gurugram, the next phase of Downtown in Chennai, and our

joint venture with Hines, the Atrium place, all buildings are now in an advanced state of

completion. Our debt to GAV is now down to 0.23, which is almost comparable to the industry's

best. And our debt to NOI is also now almost at a 4 and stated to be stood at 4 level through the


So, all in all, both the residential and the commercial businesses have done extremely well and

frankly, without taking too much of your time, I'll now open it up for questions.

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DLF Limited

May 14, 2024

Moderator:Thank you very much. We will now begin the question-and-answer session. To ask a question please click on the 'raise a hand' icon tab available on the toolbar or on the 'queue' tab available on your screen you may also post text question on 'ask a question' tab available on your screen. Kindly turn on your mike when the operator announces your name. For participants joining through the audio bridge, to ask a question you may press star and one on your touch tone telephone. If you wish to remove yourself from question queue, you may press star and 2. Participants are requested to use headsets while asking a question. Ladies and Gentlemen, we will wait for a moment till the question queue assembles.

The first question is from the line of Puneet Gulati from HSBC. Please go ahead.

Puneet Gulati:Yes, Thank you so much and congratulations on good collection run rate. My first question is actually with respect to that only. Out of the Rs. 2,100 crores of collection this quarter, how much of it is attributable to Chennai and how much do you think is a sustainable run rate on a quarterly basis?

Ashok Tyagi:Okay. So, the Chennai, I mean the total transaction value of Chennai was about Rs. 730 odd crores, and all of that got collected in this quarter. Total through the year, our collections net of the Chennai transaction were about Rs. 7600 odd crores. It was Rs. 8,300 crores including Chennai, about Rs. 7,600 crores excluding Chennai, which runs at about Rs. 1,900 odd crores per quarter. I mean, obviously, there will be spikes across quarters and we are frankly targeting for this number to grow by at least 15 odd percent on an ongoing basis for next year.

Puneet Gulati:Just 15% despite a huge sales launch pipeline?

Ashok Tyagi:So, if you look at, the Arbour had been launched in the previous year and Arbour collections came in now. I mean, the bulk of the first 35% Arbour collections have now come in. The subsequent collections will now come with stated construction milestones. Privana South and Privana West will have strong collections in the next fiscal. But please also appreciate the large chunk of our collection engines for the last 2 years was driven by the completed Camellias, which were all sold at a nine-month timeline and really as the Camellia's existing inventory is now winding down, that particular support will no longer be available. So, now really, I mean, in some sense, this year will be the first year where the new products launched in the last couple of years will be driving the entire collections mechanism.

Puneet Gulati:Understood, that's helpful. My second question is with respect to the recent land acquisition in Gurugram, which is the IREO project and that seems to have increased your land bank from 81 to 88 million square feet. How should one think about it? Why was there a need to buy it in this location and not get into some of the newer markets or allocate capital more towards Mumbai, for example? How should we think about the balance remaining land bank? Because you have a very- very large land bank in Gurugram already.

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DLF Limited

May 14, 2024

Ashok Tyagi:

So, like Mumbai itself is split across 7 or 8 distinct sub-markets. The fact is today, Gurugram is

no longer a single market. There are at least 3 or 4 distinct sub-markets or micro-markets in

Gurugram, of which the golf course road is clearly one. The erstwhile DLF City was another.

The new Gurgaon was third. I mean, frankly, Aakash has almost created the entire Privana

market as a premium market to the classical new Gurugram market now and the golf course

extension road was always a strong market where frankly, we did not have adequate land

presence. We had only one project, which was Arbour which had been launched in March of


And that was a great success, which frankly led us to believe there was potentially a window of

opportunity for us to get into if we could get the right land bank and this was a land bank which

came to us through the lenders and it was, as you know, a takeover of a bank debt, which we

did, along with the security which came with it and then obviously, we did a SARFAESI, etc.

So, I think really, I mean, this land parcel today will cost us less than Rs. 2,500 rupees a square

foot on saleable area for almost 7.5 million square feet and we believe that there is a, I mean,

frankly, this is an extremely profitable venture. I mean, we have already put a GAV of about Rs.

20,000 crores on this right now and honestly, by the time all our approvals are done across the

next year, I think hopefully the price point should be even stronger. So, this should actually

prove to be a distinctly profitable product, which is addressing a micro market where we were

not present.

Puneet Gulati:

Understood, that's very helpful and lastly, if you can give in terms of timelines of completion

for the Hines project, and what is the plan post then in terms of DCCDL acquiring that and the

Downtown project?

Ashok Tyagi:

The Downtown, you want to address, Sriram.

Sriram Khattar:

So, let me start with the Hines project. It's called the Atrium Place. It is a 2.9 million development

at this stage, spread in 4 towers. The towers start getting delivered by April, May next year, and

go on till end of next year, beginning of FY'26. So, the first 3 towers are about 600,000 square

feet each and the last tower is about a million square feet. As far as Downtown is concerned,

it's, as you know, a very large multi-use development. Downtown 2 and 3 of about 1.6 - 1.7

million are already completed and running and rent yielding. Downtown 4 is expected to be

delivered at the end of this year, early next year, which rentals starting in Q1 of the next year.

That's about 2.1 million. The development of the phase 2 as we call it, which is the Mall of India

at Gurugram and about 4.6 million square feet of offices has already commenced.

We have started the raft and ground preparation, etc., and the designs have been finalized. The

drawings have been put for municipal approvals and we are in the process of shortlisting the

contractors to do this. This has been quite an intensive planning exercise because it is an

integrated development of in excess of 7 million, which has a reasonably strong component of

infrastructure development around the 36-acre side and on the service lanes and lands around it.

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DLF Limited

May 14, 2024

There is a small phase called so-called phase 3, which is about a million square feet, which we

will do after we complete phase 2 of 7.5 million.

Puneet Gulati:

So, phase 2, you're saying for Downtown Gurugram should get completed by end of this year

and for Chennai phase 1, when should that get completed as well?

Sriram Khattar:

So, in Chennai, Downtown 1 and 2, the occupation certificate has come. As we speak, the tenants

are doing their fit outs. They are in an advanced stage and most of the rentals should start coming

in from next month onwards. As far as the third tower is concerned, which was with Standard

Chartered Bank, that is going to be completed in July-August and that's about the time Standard

Chartered will take it on for their fit-outs and we expect the rentals of that to start in the month

of March 25.

Puneet Gulati:

That's great and lastly, if you can tell us what was the exit rentals for FY'24 and your expectation

of exit rentals for FY'25. That's all. Thank you so much.

Sriram Khattar:

The exit rentals of FY'24 is Rs. 5,000 crores to Rs. 5,100 crores and the exit rentals for the next

year is Rs. 5,900 crores to Rs. 6,000 crores. There is a major jump that will come up in rentals

because of the completion of the certain towers in the two Downtowns and therefore the rentals

will take a big bump up in FY'26. And these are on the books of DCCDL. These do not include

the rentals that will kick in for the Hines joint venture on one side and the two shopping plazas

and the malls totaling to about 1.2 million being developed in the books of DLF, which are in

the Midtown, in phase 5 Gurugram and in Goa.

Puneet Gulati:

Understood, that's very helpful. Thank you so much and All the best.


Thankyou. The next question comes from the line of Parwez Kazi from Nuvama group. Please

go ahead. Line from the Parwez Kazi has been on mute, may request you to unmute the line

from your side and go ahead with the question. As there is no response, may I request you to

move on to next participant.


The next question is from the line of Kunal Lakhan from CLSA. Please go ahead.

Kunal Lakhan:

Hey, am I audible?

Ashok Tyagi:

Yes Sir.


Yes Sir, please go ahead.

Kunal Lakhan:

Just on the guidance side, right, I mean, of Rs. 17,000 crores for next year, I mean, if you exclude

the Privana West sales already done, we are talking about an incremental Rs. 11,500 crores

coming from, say, the residual new launches worth of Rs. 30,000 crores odd. So, I mean, that's

almost like about 35% to 40% of sales from the new launches that you're expecting. Considering

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DLF Limited

May 14, 2024

most of the projects that we have launched so far in the last couple of years, we have sold out of

those projects. So, this 40% of sales or like the incremental launches getting 40 percent sold for

the rest of the year, isn't that a little conservative?

Ashok Tyagi:

So, Kunal, I think, your question is, I think, if I may say so, making the error of averaging. So,

let's analyze the launches we are doing and then hand over to Aakash. We have Lux 5, which in

some sense is like the biggest launch that will happen, and which will be a product comparable

to or maybe better than the Camellias. Then we'll have the next phase of Privana coming in the

later part of the year. We'll have the Villa launch in Goa and we'll have the Mumbai launch. So,

clearly, I think the Privana, Goa and Mumbai launches should have very strong penetration of

the total launch. Lux 5 being the kind of product that it will be, would obviously be a more

strategic sale and really, Aakash, I will hand you over to how you plan to do that really.

Aakash Ohri:

So, I was going to say that also. So, Lux 5 is a super luxury product, as you know and you have

seen, and I am not saying that it's going to take the same time as Camellias did, because

Camellias was the first of its kind in that uber luxury. So, we've done Aralia, Magnolias, but

Camellias was a completely game changer. So, we did what we had to do and at that point of

time, regulations, markets, a lot of things, there were tremendous amount of headwinds.

Having built on the Camellias story now, and which is now more plausible and where most of

the people now have accepted, and then not only accepted, but endorsed this, is now the Lux 5.

So, this is not a product that can be advertised to sell and this is not something that you will have

because the price points are going to be reasonably high here per unit wise and therefore, it will

take that much time to go through. So, yes, the first year will have a certain amount of sales.

And then every year, with an incremental value, it will continue to go up and sell. The networks

and the processes that we have set up over the years for Camellias are going to be used and that's

how we are going to be going through it. Our teams on ground now are in place for all the

launches. And, yes, I mean, we are not going to stop at 17 if that's your question. But you're

right, over the past few years, you've seen a certain amount of sales velocity, and especially at

launches, because we put in a lot of effort in launches and therefore, it will go on as we have

mentioned. But we are not going to stop at 17. So, should the traction for a super luxury product

get better, we know, again, I go back to the point of it being, the price points being at a certain

value and above and therefore, should there be more traction, we are not going to hold back.

Ashok Tyagi:

But obviously, the Lux 5 being the kind of product that it is, we'll have a certain price trajectory

that we have in mind and the slight customer profile that we have in mind. And obviously, within

those 2, I mean, if the total sales volume is higher than 17, you know we'll be the happiest.

Kunal Lakhan:

Sure. A follow up to this is like, what are the timelines in terms of which quarters we plan to

launch, say, Privana next phase, Goa, Mumbai, and then Lux 5?

Aakash Ohri:

So, Q2, you will see a Goa and maybe some friends and family of Lux 5. I mean, Q2 is going to

be that. Q3 is going to be the main Lux 5 launch. Q4 is going to be Mumbai. That's how we

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DLF Limited

May 14, 2024

planned it. So, Goa will be Q2. And plus, some of the residual sales and all that, that's how we've

structured it.

Ashok Tyagi:

On Mumbai, Kunal, really, we have done all the reiki and the slum rehab, etc. So, we believe

that by end of September, we should have the complete site, not only of the stuff that we are

launching, but the 2 million square feet site completely cleared off, barricaded, access done, all

approvals done. And after that, frankly, it's a question of really, when does Aakash and the local

execution team sort of decide to get to the market. But given the fact that Q3, you may want to

focus almost exclusively on the Lux 5 launch, Mumbai could either be towards the end of Q3 or

early Q4.

Kunal Lakhan:

Understood. My second question was on, if I look at the premium segment launches for the next

year, and in fact, next few years, it's practically negligible. So, any conscious strategy there to

focus more on luxury or take a backseat on the premium side?

Ashok Tyagi:

So, again, one is that this time, we have tried to be slightly mathematical, that we have said

anything which is more than Rs. 18,000, Rs. 19,000 a square foot, we have classified as luxury.

I mean, because in our older slides, Privana used to be classified as premium. But the fact is if

Aakash is getting a price point of Rs. 19,000 plus now, I mean, really, it is luxury like the City

Floors. So, part of that is there. But obviously, some of the launches that may not happen

immediately in the future but be it Tri-city or be it New Gurugram would eventually be in the

premium thing of the say, the Rs. 10,000 to Rs. 15,000 a square foot price point. So, it's not a

conscious choice, just that right now, we are focusing on this segment. Aakash?

Aakash Ohri:

Also, it's we're focusing on the geographies that we spoke about, and they come with these price

points. So, there is no conscious strategy to push back premium. It's just that in the pipeline that

you refer for FY'25, are these products that are lined up, which are at a certain price and above,

that's all. There is a, honestly, don't read anything beyond this.

Kunal Lakhan:

Understood and just the last book-keeping question. In Privana West, how much would have

been sales from NRIs?

Aakash Ohri:

About 27% has been NRI sales in Privana West. We've been seeing a steady growth. As you

know, we started mining the NRI base from before Arbour time and we have a certain process

to do that. NRIs are one of the most strongest allies as far as DLF is concerned and, you know,

we are not happy to tell you, we've not invented anything new. DLF, since its early inception

days, has had a good NRI participation. It was only in after the 2010, when the markets collapsed,

and there were delivery issues and all that, that the NRIs faded away for other projects and

therefore, there was collateral damage also. But if you go historically and let me, make this very

clear to everybody today, that the NRIs are not only a very strong support and have been over

the last 3 decades for DLF, but also as far as payment structures are concerned, NRIs have always

known to be holding property. They are not fly-by-the-night investors. They are not investors

who just get into for smaller returns. Also, it doesn't make financial sense for them to do that.

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DLF Limited

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So, these are people who are, some of them are ones who have visibility of coming back to India

in 5 years. Most of them rent these out. Some in super luxury have kept them for their regular

India travel. But I think this whole, invest in India, and especially invest in DLF with the NRI

system has really worked and we are continuing to make sure that we are mining it well.

Kunal Lakhan:

Sure. Thank you so much and all the best.


The next question is from the line of Pritesh Sheth from Motilal Oswal. Please go ahead.

Pritesh Sheth:

Thanks for taking my question. Firstly, just on Privana West, congrats on successful launch of

second phase, just want to understand how different the demand characteristic was versus the

First Phase. Even we had a little higher pricing. So, just your comment on that.

Aakash Ohri:

So, Privana West, the qualitative nature of the demand this time has been extremely encouraging.

Again, as I say, there is a reasonably big and good demand from the corporates, entrepreneurs,

NRIs and doctors, lawyers and all. So, the demand has been good. Also, because, please

understand, the positioning of Privana, what makes the project actually tick is you've got the

product, which is very superior. I can now give you a comparison of what this product is going

to be. It is the new Crest. So, for those of you who have seen and heard about the Crest, Crest is

the benchmark for Gurugram today in the luxury category and not only in Gurugram, but I can

also safely tell you that Crest is the benchmark for a lot of people who want to emulate it in their

geographies. So, happy to today announce to you that this is going to be in the same genre. That

is the product. Then, of course, the connectivity is super for Privana. So, whether it's the Mumbai

Expressway, which is 5 minutes away, whether it is the Dwarka Expressway, which will take

you to the airport in about 25 to 30 minutes, whether it is the Jaipur Expressway, the connections

to Privana are probably the best Gurugram can have. Then you are near a 10,000-hectare of a

green lung, which is now becoming the most important priority for a lot of people who want to

breathe the freshest air in the morning. So, all this, plus the DLF lifestyle promise, plus the

ecosystems that we build, has added to this particular demand. And I've been more than happy

to share, the kind the customer mix that we've got today. It's very encouraging to see the kind of

people who come in. Also, the youngsters, as I say, I am repeating it for the one last 1 year, I am

seeing a very good shift, and that's where the base of real estate is increasing. I am seeing the 30

and above investing in our properties, and across the board. So, I think that's where the Privana

West story is.

Pritesh Sheth:

I mean, the number of cheques that you've got, where was the higher than the number of units

and hence you have pulled forward the next phase to this year, because earlier we didn't see, that

Privana launch happening this year. And are you looking at some higher, a little premium

product in Privana now in the third phase? Because if I do some back of the envelope calculation,

we are getting an average realization of somewhere around Rs. 24000 - 25,000. So, is my

calculation, right?

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DLF Limited

May 14, 2024

Aakash Ohri:

Again, let me first tell you that it was always part of, I don't think we've recalled it. It was always

supposed to be towards the end and all that, that that's something which is part of the whole

launch plan. I know it's not that much. I hope it becomes Rs. 24,000 - 25,000 soon. It will. But

right now, I think, I don't want to speculate there, but definitely, it will be upwards of the Rs.

20,000, at least 10%-15% more than the Rs. 20,000 mark for sure. But again, I reiterate, please

understand, where the demand is coming from. So, what Crest was to DLF5 is what the Privana

is starting to become for their New Gurugram business. And why this is happening is also, if

you see, American Express recently launched their biggest campus, which is again minutes away

from where the Privana is. Air India set up the largest hub there. So, hopefully, other commercial

investments are also going to be there. So, Privana is starting to become the new DLF. I call it

the DLF-6, but it is the natural progression for what it is, because it's over 100 acres and more

of contiguous land that we have. So, it's going to be one of the most prized possessions that

people have and again, I repeat, that these are not just investors. Most of them, majority of them

are people who are buying Privana for their end use. Also, because of the product being very

homogeneous in terms of the sizes, the quality of people and the mix is going to be what is

actually attracting the people to invest in it.

Pritesh Sheth:

Sure and just one last on Lux 5. How are you going to strategize the inventory that you're

bringing to the market? Will it be purely like invitation-based, starting certain customers like we

did for Camellias? And how much of the sales is baked in, in this Rs. 17,000 crore guidance

from Lux5? Or you wouldn't look at it that way?

Aakash Ohri:

So, you're right, Lux 5 will be an invitational product as was Camellias. I don't think there, we'd

like to dilute that at all. So, Lux 5 will have the same processes as Camellias was. And that is

going to be by invitation, strictly by invitation. We will continue that whole process. We've got

a very, very large network of people that we touch base all over the world in India. I am seeing

the next demand of Camellias coming from Tier 2 cities, Kanpur, Kolkata, Bangalore, Ludhiana.

These are the few sales that happened now. So, people are wanting, Bhubaneswar, people are

wanting to now, if they have, if they spend some time in Delhi, people are genuinely now

wanting to invest in this lifestyle of DLF5 and Super Luxury and Golf Links and these are fully

serviced apartments and all. So, I see that demand coming from there. The networks of these

people that we had presented to over the last 4, 5 years, we've got a very, very large base of

people that we are going to be again reaching out to, which are already now with us, those

databases. We don't need to go out. So, that's how we're going to be approaching, I think. Right

now, we've kept about Rs. 3,500 crores in this Rs. 17,500 crores to start with. But again, please

don't read beyond this. This is as per plan, as per how much we can reach out and do. But like

you said, should a good portion of that be taken, we are ready for that as well. But again, we are

not ready to compromise on Lux 5 pricing at all.

Ashok Tyagi:

Or the quality of customers.

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May 14, 2024

Aakash Ohri:

Quality of customers is absolutely a priority. We've done that. We've shown it in the worst times.

We've shown it at the time where everything was against us. Yet, we never compromised on any

of our quality of customers. We will continue to do it with this little tailwind that we have.

Pritesh Sheth:

Perfect, that pretty much helpful Aakash. Thank you and all the best to your team.


Thank you, the next question is from the line of Abhinav Sinha from Jefferies. Please go ahead.

Abhinav Sinha:

Hi, Firstly, on Privana again, when are we expecting the next phase? Is this the fourth quarter of

the year?

Aakash Ohri:

Yes, please. We are trying to bring it around that time.

Abhinav Sinha:

Ok, and what are the delivery timelines we have on Arbour and Privana now? Is it 4 years, 5


Aakash Ohri:

As per our agreements are concerned, it is always 5. But again, we have set up very robust

construction mechanisms and systems that if these things can be expedited, but these, they take

that time.

Abhinav Sinha:

Okay, Tyagi sir, just a question on the large cash and debt balance that we had at the end of the

quarter. So, this is temporary or are we expecting some large payout?

Ashok Tyagi:

So, okay. So, 2 things. If you look at the total cash balance that we have, it's about Rs. 6,000

crores, of which Rs. 4,000 crores is escrowed in the RERA 70% accounts. So, those can be used

only for construction and approval really and for little else. So, practically, while we have a

Rs. 6,000 crores cash balance, Rs. 4,000 crores is in the 70% RERA account, which is not

accessible for general business purposes. Yes, the balance Rs. 2,000 crores, we believe, is maybe

at least Rs. 750 crores to Rs. 1,000 crores higher than what we would like it to be. So, I think we

would want to eventually have that number stabilized around Rs. 1,000 crores. So, I think that's

a correction that you will see across the next 2 quarters. And hopefully, hence, that will also

result while having now won the net debt war, the next focus is to win the gross debt war and

also get the gross debt down to as near zero as possible. And for that, obviously, we can't control

the RERA cash, but we can definitely control and be far more efficient in terms of the non-

RERA cash. And the reason we obviously need to keep some non-RERA cash or at least non-

RERA lines in terms of NCD lines, etc., is that when you have stuff like a land opportunity or

something, then unfortunately, you can't use your bank borrowings for it, etc., because all of

them come into prohibited uses. So, really, about Rs. 1,000 crores, we believe, is the number

that we should maintain, which is pre-unencumbered cash. But beyond that, really, we don't need

to see. Yes, we are slightly excess right now, which we will correct.

Abhinav Sinha:

Ok thank you, Sir, on RERA cash, can we use that to raise, say, debt elsewhere or does it work

like that?

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