Company Analysis: DLF - A negative
example.
It is a horror to see debt to equity ratio for DLF. It is whopping 1.15,
much higher than any suggested reference. It is keep increasing from
2008 onward. As a reality company, many people think that the loan book
can be covered by asset against it. I do not believe on this. A house or
a shop by DLF is not a product for every one. If industrial growth and
corporate jobs are not increasing by 15% per year, to whom DLF will
sell/lease it's houses?
 |
| DLF price chart since IPO: Courtesy: Moneycontrol.com |
We
will only consider prices and earning growth after IPO. In 2007 when
investor madly rushing to buy reality stocks, DLF having per share
earning 2.65, kept quoting Rs. 1000 per share continuously between 2007
and 2008. Which means a PE of 350+. Gosh!!! Now please some financial
adviser tell me that when will DLF's earning match this PE.
From
last few months despite tripling its net profit from 2007, it is
quoting around Rs. 200 per share. Still PE ratio is 25+, which I
consider as upper side in the given market condition and theory. But
today no one recommend DLF. If at all, someone ever want to invest in
DLF, it is now. But I still do not recommend reality stock for long term
investor becasue it is too much dependent on socio-economic condition
of particular region where company is more concentrated. There are other
reasons to not to invest in reality companies. Every one know about the
spurious land deals in India. Land acquisition requires black money.
Now common investor do not know which part of balance sheet is going to
pay such unknown amount.
No comments:
Post a Comment