DLF in the UBS spotlight

It is after a long time that some good news has come the way of DLF. Showing good volumes, the stock is up over 3.5% at Rs.164 levels.

The stock is up purely on foreign brokerage, UBS putting out a report, upping its target price for the stock from Rs.175 to Rs.190. This sudden, new-found optimism in the stock is after UBS said that the stock has essentially two triggers – one is the postponement of the Rs.1600 Cumulative Convertible Preference shares; this was due for conversion in March 2015 and that has now been deferred to March 2016. The coupon rate has also been reduced from 9% to 0.01%. The second trigger is relief from Rs.630 crore CCI penalty. Of course, any more interest rate cuts will also work well for the realty major.

UBS has stated in the report that this postponement and cut in rate is positive for DLF as it will reduce the preference dividend pau-out obligations of Rs.144 crore in FY16. UBS said that it will also dilute co-founders conflict of interest position.