After rallying 94% in 2023, can multibagger DLF shares perform even better this year?

Real estate developer DLF has a central place in the Nifty Realty index, where it holds the maximum weight, of 27.6 per cent, among constituents. And what's more enticing is that it delivered a handsome return of 135 per cent in the last one year, easily beating the Nifty50’s 24 per cent return. In 2023, DLF shares grew 93.7 per cent, sharply higher than the headline index’s rise of 20 per cent.

Can you expect similar returns in the coming months? Many analysts have DLF among their top picks in the realty space despite a price-to-earnings multiple of higher than the industry

Analysts at Nuvama are bullish on the counter citing the property developer’s promising growth story, on the back of a launch pipeline, strong brand recall, favourable dynamics on the home turf, improving annuity income, and market consolidation.

The brokerage has a ‘buy’ call on DLF with a target price of Rs 1,021 per share, which suggests an upside of more than 18 per cent from Tuesday’s closing price.

The brokerage maintains that DLF surpassed its FY24 guidance, clocking pre-sales of Rs 13,315 crore, according to a research report dated January 30.

For FY25, the realty company has lined up launches of a gross development value (GDV) to the tune of Rs 32,000 crore, according to Nuvama. GDV is a key metric that determines the value of sale anticipated from completed projects.

DLF added a 29-acre (7.5 million square feet) parcel on the Golf Course Extension Road in Gurugram in the quarter ended December 31, 2023, it said.

DLF registered 80 per cent year-on-year growth in collections, led by robust pre-sales, leading to a 75 per cent increase in quarterly operating cash flow to Rs 1,108 crore, while its net cash strengthened enormosuly to Rs 1,246 crore, according to the brokerage.

"Revenue from its annuity portfolio under DCCDL grew 8 per cent YoY to Rs 1,476 crore aided by higher occupancy in the office portfolio. With the floor-wise denotification now in force, DLFU has applied for de-notifying 1.1mn sq. ft. which will be up for leasing in Q1FY25,” it added.

Several other analysts are also positive on the counter.

"With good execution skills, long-term growth is very good," AK Prabhakar, Head of Research at IDBI Capital Markets, told Zeebiz.com. Prabhakar sees DLF’s pan-India presence with a vast land bank as a good proposition.

Technical outlook

A move past the key resistance level of Rs 870 may lead to strong moves in the counter, said Jigar Patel, Senior Manager-Equity Research at AnandRathi.

"The anticipated trading range for the coming month is forecasted to fluctuate between Rs 800 and Rs 920. Traders are recommended to exercise patience and wait for a potential correction until the price reaches the range of 820-825 before considering adding long positions. The target for these long positions is set at Rs 900, with a suggested stop-loss level of 785, based on daily closing prices," Patel said.