DLF share price gained 2 percent in the morning trade on December 13 after Jefferies’ Christopher Wood in his GREED & Fear report said he will introduce investment in the Delhi-based real estate company with a 5 percent weightage.
The stock touched a fresh 52-week high of Rs 229.50 on the BSE. It has rallied 42 percent in the last three months after the corporate tax rate cut, reduction in debt and hope of growth in the rental business.
It was quoting at Rs 226.55, up Rs 1.65, or 0.73 percent at 1012 hours.
Wood, a top-ranked market strategist whose weekly GREED & Fear report has a huge following, is the global head of equity strategy at Jefferies Global.
In November Morgan Stanley had upgraded the country’s largest real estate company to overweight from equal-weight, citing reasonable valuation.
“DLF is now our top pick in the industry. The company has a balanced portfolio of development and yielding assets. Power to monetise its land bank is on the rise led by neighbourhood development. However, it remains predominantly leveraged in the NCR region. Our updated model shows reasonable valuation, and we see comfort in asset-based valuation,” the research house had said.
It introduced a new price target of Rs 269 (target discount to NAV of 25 percent, narrowed from 30 percent), implying 20 percent total return potential from current levels.
Morgan Stanley believes that DLF’s NAV quality has risen in the last few years driven by a higher contribution from the rent-yielding asset portfolio (around 34 percent, Rs 121 per share). Its large concentrated land bank in the Devco now has a more developed neighbourhood, some recent land transactions in New Gurgaon/Phase V provide a pricing benchmark and REIT listing has helped benchmark valuation for DCCDL’s large portfolio have also helped.
The brokerage also factored in DLF’s improved balance sheet, steady earnings visibility from completed unsold projects and near-term pipeline, and the recent industry re-rating. The research house says the new asset creation cycle has commenced.
While giving a nod to DLF, Wood said the investment in Godrej Properties will be removed. The stock was quoting at Rs 942.00, up Rs 11.90, or 1.28 percent, at the time of publishing this copy.
Wood raised the asset allocation in Korea in Asia Pacific ex-Japan by 5 percentage points (ppts) and cut India weightage by 2 ppts and Indonesia, Thailand and Vietnam by 1 ppt each.
News Source:- Moneycontrol