By IANS
New Delhi : Rating agency ICRA assigned Wednesday highest rating (A1+) to the Rs.20 billion short-term debt programme of DLF Ltd, the country’s largest real estate company.
This is the highest-credit-quality rating and carries the lowest credit risk in the short term, ICRA said in a release.
The rating also favourably factors in the company’s plans to reduce its current concentration on the Gurgaon market by taking up projects in other major locations and its stated policy of maintaining a sizeable cash balance, said the ICRA release.
With an increase in launches and change in its commercial model from lease to sale, DLF’s operating income (OI) and profit after tax increased from Rs.18.5 billion and Rs.4.1 billion in fiscal 2006 to Rs.39.6 billion and Rs.19.3 billion in fiscal 2007.
Although a substantial portion of DLF’s OI in fiscal 2007 (60 percent) was accounted by sales to its promoter group concern DLF Assets Limited (DAL), the transaction was done on arms-length basis and DLF has already realised a significant portion of its sale proceeds from DAL, the release said.
ICRA acknowledged that real estate industry is inherently cyclical in nature and currently there is a slowdown in demand because of prevailing high price and increasing interest rates on home loans. However, the risks are mitigated to an extent for DLF on account of its low cost land bank and strong financial profile, according to the release.
DLF is the largest domestic real estate developer with experience of over 50 years in developing real estate. DLF has developed some of the prime urban colonies in and around Delhi, including one of the Asia’s largest private township “DLF City” in Gurgaon.
Currently it is constructing projects totalling about 44 million sq. ft located across the country, which are scheduled for delivery in various stages till 2009-10.