Traders go long on DLF on asset sale plan
DLF stock climbs 4% to Rs 185.20 in spot market helped by hopes of possible RBI rate cut benefiting the realty company.
By Nihar Gokhale, ET Bureau | Updated:
MUMBAI: Derivative traders squared off their bearish bets on property developer DLF on Tuesday and created long positions on hopes the company will continue to sell prime assets to pare debt. Analysts said expectations that RBI will start cutting rates in its policy meeting in January also lifted sentiment.
DLF gained 4.1% to Rs 185.20 on Tuesday after touching the 52-week low of Rs 172 on Friday. DLF stock futures’ premium to the share widened to 1.1 points from 0.2 points the previous day and open interest rose 26%, showing the creation of long positions.
“There were many short positions which have been covered following the stock price bottoming out,” said Jitendra Panda, head sales—broking, Future Capital Securities.
DLF emerged as the second most active contract among stock futures on Tuesday, a rarity in the past couple of years as many traders have shied away from betting on the stock due to uncertainty about its prospects.
DLF has been weighed down by debt of Rs 25,500 crore, as on September 30, and slowing sales because of the economic slowdown. To reduce debt, DLF has been selling property.
Recently, the company and Hubtown sold a Pune-based software park that they jointly owned to private equity fund Blackstone for Rs 810 crore.
“With the company close to appointing a property consultant for the sale of the Lower Parel land in Mumbai and also targeting to achieve the sale of Aman Resort by 4QFY12, monetisation of either of these assets would be a key positive catalyst for the stock, in our view,” said Nomura Securities, in a note to clients.
The stock is a buy at Nomura with a price target of Rs 270. But, a section of the market warns against concluding that the worst is over for the stock, while terming the share gains on Tuesday as a ‘technical pullback’ led by short-covering.
“DLF’s quarterly results will be mediocre. Though they seem to be confident about selling assets this quarter, it’s not so easy to sell. It’s a lengthy process,” said Sharan Lillaney, analyst at Angel Broking.
“The stock is no way cheap, even at its 52-week low.” Late in December, rating agency Crisil had downgraded DLF’s debt programmes and termed its outlook as ‘negative’, citing debt and expectations of low cash flows.
“The rally was a technical pullback as the stock bottomed out. The only positive about the rally was that the volumes were abnormally high,” said Dharmesh Shah, technical analyst, ICICIDirect-.comResearch.
DLF gained 4.1% to Rs 185.20 on Tuesday after touching the 52-week low of Rs 172 on Friday. DLF stock futures’ premium to the share widened to 1.1 points from 0.2 points the previous day and open interest rose 26%, showing the creation of long positions.
“There were many short positions which have been covered following the stock price bottoming out,” said Jitendra Panda, head sales—broking, Future Capital Securities.
DLF emerged as the second most active contract among stock futures on Tuesday, a rarity in the past couple of years as many traders have shied away from betting on the stock due to uncertainty about its prospects.
DLF has been weighed down by debt of Rs 25,500 crore, as on September 30, and slowing sales because of the economic slowdown. To reduce debt, DLF has been selling property.
Recently, the company and Hubtown sold a Pune-based software park that they jointly owned to private equity fund Blackstone for Rs 810 crore.
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“With the company close to appointing a property consultant for the sale of the Lower Parel land in Mumbai and also targeting to achieve the sale of Aman Resort by 4QFY12, monetisation of either of these assets would be a key positive catalyst for the stock, in our view,” said Nomura Securities, in a note to clients.
The stock is a buy at Nomura with a price target of Rs 270. But, a section of the market warns against concluding that the worst is over for the stock, while terming the share gains on Tuesday as a ‘technical pullback’ led by short-covering.
“DLF’s quarterly results will be mediocre. Though they seem to be confident about selling assets this quarter, it’s not so easy to sell. It’s a lengthy process,” said Sharan Lillaney, analyst at Angel Broking.
“The stock is no way cheap, even at its 52-week low.” Late in December, rating agency Crisil had downgraded DLF’s debt programmes and termed its outlook as ‘negative’, citing debt and expectations of low cash flows.
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“The rally was a technical pullback as the stock bottomed out. The only positive about the rally was that the volumes were abnormally high,” said Dharmesh Shah, technical analyst, ICICIDirect-.comResearch.
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