Deal with Lodha significantly positive for DLF: Edelweiss

MUMBAI: Edelweiss has maintained ‘buy’ recommendation on realty major DLF after the reports said that the company got the balance Rs 725 crore as the final tranche of equity portion from Lodha Group.

“Though DLF had concluded this transaction, the Street has been sceptical of the deal going through due to doubts on the buyer’s ability to fund the transaction.

While management is yet to confirm the development, we view this news as a significant positive as DLF is currently saddled with significant debt (Rs 227 billion), reduction of which is crucial for a sustained stock performance,” the report said.

The brokerage has maintained its buy recommendation with a target price of Rs 263 per share.

According to The Economic Times report, DLF received the final tranche of the nearly Rs 2,725-crore transaction after it sold its 17-acre land parcel of NTC Mill in Lower Parel, to the Lodha Group in August 2012 as part of its asset monetisation / debt reduction programme.

Lodha had earlier paid Rs 500 crore to DLF as an upfront towards equity component of the total consideration. The Mumbai developer will also have to absorb debt worth Rs 1,500 crore that was raised by DLF for their proposed project on this prime land parcel.

For funding, Lodha organised Rs 6.05 billion through its own sources and raised Rs 1.2 billion from a NBFC,” the Edelweiss report said