DLF shares jump nearly 6% post SAT order; closes at Rs 157.50 on Friday

MUMBAI: Investor sentiment in India's largest realty firm DLF got a boost after Securities Appellate Tribunal ( SAT) quashed a Sebi order barring the promoters and the company from accessing the capital market. DLF shares rose 5.7% to close at Rs 157.50 on Friday after gaining 8% in a weak market. But, analysts believe upsides could be short-lived as the sector continues to be weighed down by demand worries and high debt.

“SAT order will have a positive impact only on the operational part of the company, but the fundamental issues in the company and in the real estate sector remain,” said Sudip Bandyopadhyay, managing director & CEO, Destimoney Securities.

Analysts said investors will be watching out for comments from the company on the roadmap to reduce debt. DLF had debt of Rs 20,300 crore as on December 31, 2014. Recent reports suggest the company is looking to sell properties and launch Real Estate Investment Trusts (REITs) to reduce debt.

Brokers and analysts said launching REITs still remains uncertain. “Raising funds through REITs looks a little difficult for DLF as Budget proposals and clarifications on REITs are not good enough,” said Bandyopadhyay.

The stock has rebounded 50% since its crash on October 14 last year after the Sebi order had banned the company and promoters from raising funds from the capital market.

DLF will be dropped from the benchmark index Nifty from March 27, which would result in a selloff by exchange traded funds and foreign institutional investors to adjust their portfolios for the index. Investors are also uncomfortable with the controversy surrounding the company's alleged links with Robert Vadra, son-in-law of Congress chief Sonia Gandhi.

DLF’s revenues for the quarter ended December 2014 declined 5% from the same period year ago owing to muted bookings in ongoing projects. “While we believe if more investigations on DLF’s land holdings evolve after the recent changes in government in Haryana state and in Delhi, it could create more uncertainty around DLF’s holdings, titles and regulatory approvals obtained earlier,” said Ashish Jagnani, analyst of UBS in a recent note.