DLF Ltd Aims to Raise Rs 10,000 Crore Over Next Year
India's largest real estate company by market share, DLF Ltd, is planning to raise a substantial amount of Rs 10,000 crore over the next one year. This move is subject to the approval of the company's shareholders, who will vote on an enabling resolution during the upcoming annual general meeting on September 30.
Rationale Behind the Fundraising
According to a DLF spokesperson, "This is a standard procedure to raise money. We need the shareholders' approval to raise money. This process authorizes us to raise money up to Rs 10,000 crore." It's worth noting that the company may not utilize the entire amount, opting instead for a smaller fundraising round. The resolution's validity spans one year, until the next AGM.
Company Overview
DLF boasts a significant market size of Rs 84,909 crore, cementing its position as India's largest real estate company. Recently, in July, the company announced plans to buy back up to 2.2 crore shares at a maximum price of Rs 600 per equity share, allocating Rs 1,100 crore for this purpose, which will be financed through internal resources.
Share Buyback Strategy
The share buyback will be executed through open market purchases via the stock exchange route. This strategic move is expected to:
- Enhance Earning Per Share (EPS): By reducing the number of outstanding shares, the EPS is likely to increase.
- Lower Price Earning (PE) Ratio: A decreased PE ratio can positively impact the company's stock price, making it more advantageous for future fundraising endeavors.
Market Performance Context
The buyback proposal comes on the heels of a significant decline in the company's market value, with share prices plummeting below the initial public offering (IPO) price of Rs 525 per share.Previously, the shares had traded at over double the public offer price but have since dropped to less than half of the lifetime high of Rs 1,225, recorded on January 15 this year.
Impact on Promoter Holding
If DLF proceeds with the planned buyback of 2.2 crore shares, the promoter group, comprising KP Singh and family, will see their holding increase to approximately 89.5% from the current 88.2%.
Ongoing Projects
DLF is currently developing various projects across key locations, including:
- Gurgaon
- Chennai
- Indore
- Rajarhat
- Kochi