Sell DLF, target of Rs 158: Karvy Stock Broking
Karvy Stock Broking has maintained its sell rating on DLF with a price target of Rs 158 in its May 14, 2009 research report.
“Promoters sold 9.9% stake for Rs 38.6 billion. DLF promoters have sold 9.9% stake in the company at Rs 230 per share (amounting to Rs 38.6 billion) through overnight book building process with the participation of various FIIs. We believe that this will only be short term positive for DLF as almost 57% of this money will be used by DLF to buy a stake in DAL, giving an exit to DAL PE investor DeShaw. DeShaw invested USD 400 million in DAL in 2007 and was promised an exit through an IPO, which eventually did not happen, given the global financial meltdown. DeShaw will be receiving USD 450 million which includes interest at 6% per annum.”
“We have assumed that the remaining amount, after paying DeShaw, will be cash in DLF books. This has reduced our net debt and increased our NPV from Rs 188 to Rs 198 per share. Keeping the discount to NPV constant at 20% we give a price target of Rs 158 on the company maintaining our
Sell rating on the company at current levels,” says Karvy Stock Broking’s research report.