Key factors that dented DLF's performance in Q3

Realty giant DLF's net debt has increased by nearly Rs 400 crore (Rs 4 billion) during the third quarter of the current fiscal to Rs 20,336 crore (Rs 203.36 billion).

According to investors' presentation, the net debt of DLF, the country's largest real estate developer, rose to Rs 20,336 crore (Rs 203.36 billion) as of December 31, from Rs 19,943 crore (Rs 199.43 billion) at the end of the July-September quarter.

The current attributable net debt to DevCo (development arm) is Rs 6,350 crore (Rs 63.50 billion) and to RentCo (rental business) is Rs about Rs 14,000 crore, it added.

DLF expects that the net debt of DevCo to stay range bound (+/- Rs 1000 crore) in the short term.

The attributable net debt to RentCo (rental business) would continue to increase as the rentals and capex of this segment grows.

"Target remains to maintain and reduce Devco Debt through improvement in operating/monetisation cash flows and to reduce RentCo debt through capital actions through REITs," DLF said.

DLF said it is ready to launch a large CMBS (Commercial Mortgage Backed Securities) for raising about Rs 3,600 crore (Rs 36 billion in its SEZ business to improve the quality of debt.

Last year, it had raised Rs 900 crore through CMBS. Yesterday, DLF reported 9 per cent decline in consolidated net profit at Rs 131.79 crore for the quarter ended December due to fall in sales as well as other income.

Its net profit stood at Rs 145.29 crore (Rs 1.45 billion) in the year-ago period. Income from operations fell by 5 per cent to Rs 1,956.72 crore (Rs 19.56 billion) for the third quarter of this fiscal from Rs 2,058.42 crore in the corresponding period of the previous year.

Total income declined by 20 per cent to Rs 2,079.82 crore (Rs 20.79 billion) for the quarter ended December from Rs 2,590.2 crore (Rs 25.90 billion) in the year-ago period.

Besides lower sales, DLF's net profit fell because its other income dropped by 77 per cent to Rs 123.1 crore during October-December quarter of this fiscal from Rs 531.78 crore in the year-ago period.

DLF had said that the company "expects sales volume of residential products to reach normal volumes in the next 12-18 months".

Rental business which is a leading indicator of demand continues to grow at targeted pace.

The company had said it remains committed to the medium term goals related to debt reduction and cash-flows as outlined in February 2013, but "the timelines of its implementation has been adversely impacted due to slower GDP growth and uncertainties due to the SEBI restrictions".

DLF has a land bank of 295 million sq ft, of which 50 million sq ft is under development.