DLF steps up asset monetization drive to cut debt and ease interest burden: Edelweiss Securities

NEW DELHI: DLF has had a stressed financial year 2012, with operating cash flows of Rs 1,500 crore being insufficient to service interest payment of Rs 3,000 crore, says a new report on DLF by Edelweiss Securities.

The report points out that in the last few months, the company has "stepped up its asset monetization drive to cut debt and ease the interest burden. On the other hand, the company has stepped up launches which will strengthen cash flows." Revenues of DLF are significantly derisked with 63% of it coming from the development company compared to 85% in 2009 and about 25% coming from the rental assets as well as service and maintenance income compared to 8% in 2009.

The company's focus on asset divestment is expected to now accelerate cash flows. In FY12, interest payment of Rs 3,000 crore "has eaten away the operating cash flows )ex-land sales)."

The real estate firm has said it plans to cut its debt by about Rs 5,000 crore this year through sale of non-core assets, which include the just concluded sale of its NTC mill land in Mumbai, and two other large assets-its wind power business and Aman Resorts. This will help ease its interest burden.

"Further, expected launch of Magnolias Phase II in H2 FY13 will strengthen its operating cash flows," says the report.