DLF [stockquote]DLF[/stockquote] got hammered following a report from Veritas Investment Research. Key highlights:
- Current valuation seems to be based on an a rosy scenario about its ability to de-leverage its balance sheet as well as to generate cash flows from its operation.
- They do not have the execution capability, and they are unable to keep their promises.
- DLF is finding it difficult to execute on converting the land it owns into cash flow generating assets. DLF should be in the business of generating revenues and developing land and not in the business of holding land and selling it.
- The company wanted to be one of the largest in hospitality business in India and wanted to have 4000 rooms in operation by 2010 or 2011 and now their entire hotel business is up for sale. They keep on changing their plans and continue to not deliver in the marketplace.
- DLF might have to hold on to these assets for a much longer time period than it is perhaps guiding the marketplace. And may need to restructure loans and dilute equity to get out of the hole it finds itself in, given that it has negative cash flows of Rs 936 crore just this year.
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