Mumbai, June 22 (IANS) Shares of realty major DLF appreciated on Wednesday on the back of reports that speculated on a substantial minority stake sale by the company in its commercial property arm — DLF Cyber City Developers (DCCDL).
The company’s stock at the BSE gained 1.56 per cent at Rs 140.10 from its previous close of Rs 137.95. The scrip touched a high of Rs 141.20 and a low of Rs 137.45 during the day’s trade.
Dhruv Desai, Director and Chief Operating Officer of Tradebulls, said that DLF’s scrip has appreciated since June 17, 2016, on back of reports that the company might sell a substantial minority stake in its commercial property unit.
“Recent media reports have cited that Blackstone Group, GIC of Singapore and Brookfield Asset Management have done separate bids of over $1-billion to acquire a 40 per cent stake in DLF’s commercial property unit that owns rent-yielding assets,” Desai said.
If it materlises, the deal will allow the country’s largest real estate developer to pare down and re-finance its debt pegged at around Rs 22,000 crore.
“This deal which is expected to generate Rs 12,000 crore to Rs 14,000 crore will help DLF reduce its debt burden. This will help DLF to reduce its residential debt which is around Rs 8,200 crore,” Desai said.
“DLF has been trying to reduce debt and this is the move in right direction. Post this transaction, the concerns on DLF’s leverage will be addressed.”
However, for the company to generate positive cash flows, the housing market would first need to recover, Desai added.
According to Vaibhav Agrawal, Vice President and Research Head at Angel Broking, the news flow on the prospective stake sale has been positive for the company.
“The news flow of stake sale in DLF’s commercial properties is being looked upon as positive, as the sale proceeds could be used to lower balance sheet debt,” Agrawal said.
Last year, the real estate major said its promoters will sell a minority stake in DCCDL.
The company’s rental-revenue based subsidiary owns major portion of office and commercial complexes.
It has been widely speculated that after it brings in a major global investor, the realty giant would list DCCDL via real estate investment trust (REIT).