Motilal Oswal Financial Services has reiterated a BUY call on real estate major DLF Ltd, in a 1QFY27 results update dated August 4, 2026, setting a 12-month target price of Rs755 — a projected 17% upside over the stock's current market price of Rs643.

Pre-Sales Slump, But Brokerage Sees a Turnaround Brewing

DLF's headline number for the quarter made for uncomfortable reading. Pre-sales cratered to just Rs6.6 billion, a precipitous 94% year-on-year collapse and a full 56% below what Motilal Oswal's own desk had penciled in. The culprit, per the brokerage, was not waning demand but a bottleneck of deferred launches — projects awaiting regulatory clearances rather than buyer appetite.

Crucially, the analysts frame this as a timing issue rather than a structural one. DLF is sitting on a launch pipeline worth roughly Rs200 billion for FY27 alone, anchored by DLF City (with Rs80–90 billion of potential value), the Arbour Senior Living project, Westpark's second phase, and the long-awaited Goa development. Stretch the horizon further, and the developer's medium-term pipeline swells to an imposing Rs602 billion. Add in Rs124 billion of unsold inventory from projects already launched, and Motilal Oswal still expects a — admittedly modest — 2% CAGR in pre-sales, taking the metric to Rs209 billion by FY28.

The Annuity Engine Keeps Humming

While the residential arm stumbled, DLF's rental machinery — run through its joint venture DCCDL — showed no such hesitation. Rental income climbed 9% year-on-year to Rs14.4 billion, with the combined DLF, DCCDL and Atrium rental pool now generating Rs16.3 billion. Occupancy across the office portfolio held firm at 95% (a granular 98% in non-SEZ space against 89% in SEZ zones), while retail assets stayed nearly full at 97% occupancy.

Atrium Place has effectively reached full leasing, with occupancy certificates secured for three of its towers and the fourth expected imminently. On the retail front, Midtown Plaza is operational and 97% leased, Summit Plaza is tracking toward a similar occupancy level by July 2026, and the newer Promenade Goa asset — currently at 64% leasing — is expected to climb to 85–90% within six to eight weeks.

Looking ahead, Motilal Oswal expects existing rental assets alone to deliver 10–11% growth in FY27, pushing exit-quarter rentals to an estimated Rs73–75 billion, with the medium-term run-rate potentially touching Rs100 billion once new assets ramp up. The brokerage has, however, trimmed its own rental income estimates modestly to Rs71 billion for FY27E and Rs79 billion for FY28E.

A Balance Sheet Built to Withstand the Cycle

Despite the soft top line, DLF's finances remain conspicuously sturdy. Residential collections dipped 11% year-on-year to Rs24.1 billion, yet the company still banked surplus cash of Rs10.5 billion, lifting its net cash position to Rs152 billion for the quarter. Within the DCCDL portfolio, net debt edged down to Rs181 billion from Rs182 billion in the previous quarter, translating to a conservative net debt-to-GAV ratio of just 0.18x. The cost of debt inched marginally higher, to 7.14% from 7.08%.

Quarterly Scorecard

Beyond the headline print, Motilal Oswal notes DLF is carrying a surplus cash potential of ~Rs438 billion from inventory already launched, alongside a residual gross margin of Rs390 billion yet to be booked — a cushion that underscores the brokerage's confidence even amid the pre-sales soft patch.

Inside the Management Call

• Management reaffirmed its full-year FY27 booking guidance of Rs200 billion, with the Hamilton and Arbour 2 senior-living launches slated for the second half and the next Privana phase targeted for early CY27.
• Luxury project The Dahlias continues to draw brisk demand, with 65% of inventory sold and realizations exceeding Rs100,000 per square foot, touching Rs125,000/sqft on premium floors; roughly 25–30% of buyers hail from outside the National Capital Region, including NRIs.
• The Goa residential project has cleared most approvals but awaits resolution of a pending public-interest litigation; it is expected to contribute approximately Rs20 billion to FY27 pre-sales.
• DLF has deployed Rs5.5 billion toward strategic land parcels in Gurugram and an NCR land auction over the past two quarters.
• New leases signed in Downtown Gurugram Phase II are commanding roughly Rs200 per square foot per month, well above the Rs150–155psfpm on existing Downtown assets — evidence of healthy rental reversion.

How Motilal Oswal Arrives at Rs755

The brokerage's valuation rests on a sum-of-the-parts framework, blending the developer's residential land bank against its stabilized rental assets:

Motilal Oswal notes that it assigns zero growth premium to DLF's landbank, arguing the upside is already reflected in existing estimates, with any incremental re-rating likely to come from fresh project additions in the Mumbai Metropolitan Region or other new markets.

The Bottom Line for Investors

Motilal Oswal's stance is unambiguous: the near-term pre-sales weakness is a scheduling issue, not a demand issue, and DLF's fortress balance sheet — net cash of Rs152 billion, negligible leverage, and a rental annuity book growing at double-digit clips — gives it ample room to absorb the delay. The brokerage maintains its BUY rating with an unchanged target price of Rs755, implying 17% headroom from current levels.

Sources: Motilal Oswal Financial Services — DLF 1QFY27 Results Update, August 4, 2026; Company filings.