Tag: DLF

Analysis: DLF

Today’s pick is [stockquote]DLF[/stockquote]. Even though the stock experienced a strong uptrend around June, it is still trading at roughly the same price as it was a year ago. 

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Oscillators RSI and CMO are at currently at 40 and -39. At this level of RSI, the stock is at oversold levels (according to the historical RSI levels). The CMO is closing in towards the oversold side. Both the technicals are showing a buy signal.

MACD line and signal line are drifting apart from each other and histogram levels are fairly stagnant. The behavior of histogram (a decreasing slope) can act as an early signal of the imminent short-term up-trend.

The GMMA chart is just too messy. The long-term lines are moving close to each other (signaling a probable change of previous trend) and the decreasing separation in the short term lines suggest that the traders should be on a lookout for a spike in volatility in the near-term.

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DLF’s average correlation of 0.71 with the Niftybees proves to be a strong and positive correlation. At this level the movements of the stock will be of the similar magnitude as Niftybees. [stockquote]NIFTYBEES[/stockquote]

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DLF has a historical volatility in the range of 0.4 to 0.9. The volatility is currently in the middle range and currently should not be a matter of concern to the traders.

Looking at these technicals, it appears that the stock is presently nearing oversold territory. A short term buy would be a good idea but for the long term you might want to be on your back foot. Resistance levels are around Rs. 240 (Rs. 260 long-term) and a very strong support is visible around 180 levels.

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Veritas: DLF should be at half of where it is trading today

DLF [stockquote]DLF[/stockquote] got hammered following a report from Veritas Investment Research. Key highlights:

  1. 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.
  2. They do not have the execution capability, and they are unable to keep their promises.
  3. 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.
  4. 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.
  5. 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.

Read more: ET, DNA, Hindu, VCCircle

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DLF continues to be in a quagmire

Residential sales volume was up about 15%, about two-fifths of which came from plotted land sales, which has a shorter sales cycle. Thanks to this, DLF’s revenue grew 21% over a year ago.

Operating margins contracted by about 290 basis points from a year back.

Analysts’ presentation paints a rather grim picture, indicating fewer residential launches and lower commercial leasing volumes compared with previous quarters.

DLF continues to be in a quagmire – livemint.com.

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