Bloomberg News

DLF Slumps Most in 2 Weeks on Goldman Sachs, BNP Downgrades

October 14, 2011

Oct. 14 (Bloomberg) -- DLF Ltd., India’s biggest developer, fell the most in two weeks after Goldman Sachs Group Inc. and BNP Paribas SA cut their ratings on concern the stock’s rally was overdone and the company may post lower operating income.

DLF’s rating was lowered to “neutral” from “buy” at Goldman Sachs and removed from its “Asia Pacific Buy List,” according to a note to clients today. DLF was also downgraded to “reduce” from “hold” at BNP Paribas by analyst Avneesh Sukhija.

The stock, which has rallied 31 percent from this year’s low on Aug. 26, lost 3.3 percent to 230.55 rupees at 11:38 a.m. in Mumbai trading, set for its steepest decline since Oct. 3.

“We believe the stock has started to price in asset sales while we see limited upside to our operational estimates,” analyst Puneet Jain at Goldman Sachs said in the note. “Going forward, we expect stock performance to be driven by improvement in quarterly sales velocity and pick-up in commercial leasing volumes, but we have limited visibility on the same currently.”

The projected asset sales are unlikely to generate significant value for DLF, BNP said in its note. Weak quarterly earnings and an unfavorable judgment in the fine levied by the antitrust agency could further strain cash flows, BNP said.

The developer said this week it filed a case challenging the antitrust agency’s order that fined the company 6.3 billion rupees ($129 million) for “abuse of dominance” related to the sale of apartments.

--Editors: Linus Chua, Malcolm Scott

To contact the reporter on this story: Pooja Thakur in Mumbai at

To contact the editor responsible for this story: Andreea Papuc at

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