DLF is going for IPO at a price band of 500-550/-

Reasons why not to invest.
1) It is a mega issue… I will be surprised if it gets fully subscribed (in all categories) leave alone over subscribed.
2) with a EPS of Rs 12.80 it will have a PE of 47.7x… too high for an industry that is facing recession.
3) With high interest rates and construction more than the requirements (yes a lot of the developed property is now waiting for occupants) i do not see a short term bright future for any company associated with real estate.
4) With Delhi and NCR almost fully saturated, DLF plans to move outside to other regions… a risk which can backfire.

My strategy… wait for the listing… if the stock lists at 450/- buy some and if it goes to less than 400 go bullish on it.

3 replies on “DLF”

Yes, the stock is definitely overvalued. The size is too large b’cos of which too mch funds will be mopped up n the market can further destabilize. In addition, the outlook for real estate is not as rosy as it was painted last yr.

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