DLF down 6.7%; Citi maintains buy

MUMBAI: Shares of real estate major DLF extended Monday's decline, as the sharper-than-expected decline in third quarter earnings has heightened fears of more such steeper losses in the coming quarters. This is because demand for houses and offices are expected to remain subdued amid the economic downturn. Tuesday at 10:32 am, the stock was down Rs 10.20 or 6.66% at Rs 143, after falling Rs 24 or 13.5% on Monday.

Citigroup, however, reaffirms its buy rating on the New Delhi-based realty company and it sees the recent correction as an opportunity to purchase the stock citing track record, good asset-geographic mix and healthy balance sheet. The bank has cut its target price for DLF to Rs 240 to factor in the cut in DLF's net asset value (NAV) amid tough times.

"With deteriorating macro environment and intensifying liquidity crunch, we are reducing DLF's Mar'09E NAV by 19% to Rs369 (vs. Rs453 earlier) factoring in a 20% price decline (vs. 15% earlier) in our assumptions, as we see market environment getting challenging and DLF foraying aggressively toward mid-income housing where realizations are lower; and delay in project timelines as new project launches are put on hold," Citigroup said in a report.