Brokers’ Call: CLSA upgrades DLF

CLSA has upgraded DLF stock to ‘Outperform’ with a target price of Rs 280. DLF’s earnings have declined for the past five years in a row and FY13 will be 87% lower than FY08 peak.

“We expect a trend reversal with a 40% earnings CAGR over FY13-15CL driven by better margins and higher sales activity. We build-in 16% debt reduction over March 12-15 period and the potential equity issuance of 80 million shares during 1QFY14 would be over and above the 16%,” CLSA said in a report.

CLSA downgraded earnings estimates by 10-24% for the next two years due to the change in accounting policy and lower margins.

However, potential equity issuance driving debt reduction, launch of high value Crest and Camellia, commencement of metro in Cybercity are all the near-term triggers.