DLF shares fall after negative research report from Veritas

MUMBAI: Shares of DLF took a beating after Vertias Investment Research put a 'Sell' on the stock. As per the report, in a best case scenario DLF is worth Rs 100/share ($U.S. 2.04) - less than half its current stock price of Rs 226.9 ($4.62) - from its core operations and investments, which approximates 1x Veritas adjusted book value of Rs 101($2.06)/share.

The Canadian research firm, making scathing remarks on the company, said that the claims made by management about its ability to execute were fanciful.

"If your investment decision incorporates management integrity, then bypassing DLF will be an easy choice. For those willing to look past aggressive and conflicting accounting policies, self-enrichment and inability to deliver on promises, then perhaps a balance sheet stretched to the limit (TTM netdebt/EBITDA multiple of 6.03x2), with no respite in sight and debt restructuring a real possibility, will be the dissuading part," the report said.

"We do not believe the disclosed book equity and asset base of the Company. We believe that via its dealings with DAL, from FY07 to FY11, the company inflated sales by at least Rs 11,236 crore ($U.S. 2,607M) and its profit before tax by Rs 7,233 crore ($U.S. 1,690M)," it added.