| DLF Limited | ||||||
| Long-term rating upgraded to 'Crisil AA+ / Stable'; Short-term rating reaffirmed; NCD Withdrawn | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has upgraded its rating on the long-term bank facilities of DLF Ltd (DLF) to ‘Crisil AA+/Stable’ from ‘Crisil AA/Positive’, and has reaffirmed its ‘Crisil A1+’ rating on the short-term facilities. Crisil Ratings has withdrawn its rating on non-convertible debentures (NCDs) aggregating Rs 1,400 crore at the request of the company and due to non-issuance of the NCDs. This is in line with the policy of Crisil Ratings for withdrawal of ratings on debt instruments.
The upgrade reflects the expectation that DLF will maintain its strong business risk profile, driven by healthy sales booking for its luxury and ultra-luxury projects, strategically planned new launches, good market position and execution track record. The strong saleability of DLF’s new launches has resulted in robust collections and cash flow from operations (CFO), leading to higher-than-expected deleveraging. The deleveraging is expected to continue this fiscal, resulting in continued improvement in the financial risk profile of the company.
The company clocked robust sales of ~Rs 21,223 crore (including through joint ventures [JVs]) in fiscal 2025, driven by robust sales performance of its luxury project, Privana West, and super luxury project, The Dahlias. The strong sales continued in the first quarter of fiscal 2026 with Privana North (Privana Phase III) selling out and sales of Rs 11,425 crore for the quarter. DLF will likely maintain its sales momentum over the medium term, driven by balance inventory of ~Rs 23,000 crore (mostly in The Dahlias) and launch pipeline of 25 million square feet (msf) with estimated sales potential of ~Rs 62,900 crore over the next 4-5 fiscals.
The company has further diversified in Mumbai by launching The Westpark through a JV—the project was sold out and recorded sales of ~Rs 2,300 crore. On account of the strong sales performance and assured receivables of Rs 37,224 crore as of June 2025, collections are expected to remain robust at Rs 10,500-11,500 crore in fiscal 2026 and grow by 20-25% (Crisil Ratings estimates) in fiscal 2027.
Reduction in gross debt to Rs 2,450 crore as on June 30, 2025, from Rs 3,814 crore as on March 31, 2025, has led to improvement in the financial risk profile, which is expected to remain strong over the medium term, driven by sustained focus on deleveraging and healthy operating performance. The company became net debt negative (considering only non-RERA encumbered cash) as of June 2025. Lease rental discounting (LRD) debt formed ~16% of its overall debt as on June 30, 2025. Gross debt is expected to reduce to Rs 1,000-1,100 crore by fiscal 2026, with LRD forming 35-40%. The ratio of gross debt (excluding LRD) to CFO (excluding cash flow from the annuity business) is expected to remain below 1.0 time over the medium term. However, any significant debt-funded acquisition will remain monitorable.
As on June 30, 2025, DLF had 1.8 msf of leasable area in office assets and 0.2 msf of leasable area in retail assets with over 95% occupancy and generating Rs 350-400 crore of rental income. Two shopping plazas (Summit Plaza, DLF 5, Gurugram [0.4 msf], and Midtown Plaza, Delhi [0.3 msf]) and a mall (DLF Promenade, Goa [0.7 msf]) totaling 1.4 million are being developed in the books of DLF. These assets are expected to generate annual rentals of ~Rs 400 crore at full occupancy.
Healthy sales and collections have led to significant increase in cash flow and strong committed receivables of Rs 37,224 crore as of June 2025, which will be adequate to cover the entire pending construction cost of ~Rs 23,500 crore and debt obligations. In the development business under DLF, liquidity is supported by cash and bank balance of Rs 10,429 crore as on June 30, 2025 (with about Rs 7,782 crore in RERA cash). The cash flow of DLF will also continue to be supported by the dividend income received from DLF Cyber City Developers Ltd (DCCDL; ‘Crisil AAA/Stable’). DCCDL is a JV with GIC, in which DLF holds two-thirds stake, and is the rental arm of the group.
These strengths are partially offset by susceptibility to risks and cyclicality inherent in the real estate sector, with contingent liabilities and pending litigations. |
Analytical Approach Crisil Ratings has combined the business and financial risk profiles of DLF and its subsidiaries and associates because of their strong operational and financial linkages.
Furthermore, Crisil Ratings continues to moderately consolidate DCCDL to the extent of the economic incentive it draws. Crisil Ratings continues to factor in the dividend that DLF would receive from DCCDL on account of its shareholding in DCCDL. Both the entities have independent management, and DLF and GIC have affirmative voting rights for various decisions taken by DCCDL. The debt and cash flow of DCCDL remain ring fenced, with no cross guarantees.
Furthermore, Crisil Ratings has fully consolidated debt of Pegeen Builders and Developers Pvt Ltd as DLF group has provided a corporate guarantee for the same.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers - Strengths Substantial and sustained increase in the sales bookings and cash flow, with strong market position, aided by large, low-cost land bank and economies of scale DLF achieved sales of ~Rs 21,223 crore (including JVs) in fiscal 2025, driven by robust sales in its luxury project, Privana West, and super luxury project, Dahlias. The strong sales performance continued in the first quarter of fiscal 2026 with Privana North (Privana Phase III) selling out and sales of Rs 11,425 crore recorded for the quarter. The company is likely to record sales of ~Rs 20,000 crore (including JVs) in fiscal 2026. Company has a strong pipeline of 25 msf to be launched over the medium term (next 4-5 fiscals), along with balance inventory of ~Rs 23,000 crore (including The Dahlias), which will support sales of Rs. 16,000-20,000 crores (including JVs) per fiscal over the medium term. The company has diversified in Mumbai by launching a project, The Westpark, through a JV—the project was sold out within five days of launch and recorded sales of Rs 2,300 crore. On account of the strong sales performance and assured receivables of Rs 37,224 crore as of June, 2025, collections are expected to remain robust at Rs 10,500-11,500 crore in fiscal 2026 and grow by 20-25% (Crisil Ratings estimates) in fiscal 2027.
DLF has an established track record in the domestic real estate sector across segments and regions. It is a well-recognised brand, with the most extensive track record among private developers. Its strong brand name has given it the ability to sell projects even in the early stage of construction.
The large, low-cost land bank with development potential of 188 msf in prime locations across India, of which, ~51 msf has been identified for development, underpins DLF’s strong market position, supports profitability and lends a significant competitive edge over other real estate developers.
Comfortable financial risk profile backed by deleveraging The significant deleveraging by the company, with gross debt reducing to Rs 2,450 crore as on June 30, 2025, from Rs 3,814 crore as on March 31, 2025, has led to improvement in its financial risk profile. Sustained focus on deleveraging and healthy operating performance will keep the financial risk profile strong over the medium term. The company became net debt negative, considering only non-RERA cash, as of June 2025. LRD debt formed ~16% of its overall debt as on June 30, 2025. Gross debt is expected to reduce to Rs 1,000-1,100 crore by fiscal 2026, with LRD forming about 35-40%. The ratio of gross debt (excluding LRD) to CFO (excluding cash flow from the annuity business) is expected to remain below 1.0 time over the medium term. Any deviation in the debt reduction trajectory and any material debt-funded acquisition will be monitorable.
Furthermore, gradual sales of the finished inventory will continue to support cash flow over the medium term while the rental and hospitality portfolio will continue to contribute more than Rs 400 crore annually.
DLF also has certain projects in development under JVs, debt for which is not consolidated, except where DLF has provided corporate guarantee. While these projects are expected to be incrementally funded through their own collections and sanctioned debt limits, limited support from DLF has been factored in the near term.
Strong financial flexibility Financial flexibility is driven by annual dividend expected from DCCDL, which supports the cash flow of DLF. DLF’s strong market capitalisation provides flexibility to raise funds with minimal dilution. DLF also has a track record of raising funds from national and international investors, part from banks and financial institutions, further providing liquidity cushion. Cash flow is also supported by the portfolio of leased assets and large land bank. |
Key Rating Drivers - Weaknesses Exposure to inherent risks and cyclicality in the real estate industry and risk of geographical concentration in revenue profile Cyclicality in the real estate segment causes fluctuations in cash inflow. As against this, cash outflow towards projects and debt obligation are relatively fixed, resulting in substantial cash flow mismatch. Any decline in the pace of sales could lower the expected collections over the medium term. Furthermore, occupancy and rental rates remain susceptible to economic downturns, which could constrain the tenant's business risk profile and thereby the rental collections of DLF.
Additionally, DLF’s reliance on the Gurugram real estate market has been high and any significant slowdown in demand or oversupply in the region may affect revenue. However, the company has a strong brand and is slowly focusing on geographical diversification and has re-entered the Mumbai market and has planned launches across Goa, Gurugram and Tricity (Chandigarh, Mohali and Panchkula). However, the extent of geographical diversification in the revenue profile will remain monitorable.
Contingent liabilities and pending litigations DLF has significant contingent liabilities because of matters related to income tax and service tax, along with indemnities provided to DCCDL and penalty imposed by the Competition Commission of India (CCI) in 2011 (for which DLF has already deposited Rs 630 crore with the Supreme Court). Most of the matters are longstanding and have shown limited progress, and some amounts have been deposited pending resolution. While the company has reduced contingent liabilities in the form of income tax demands from Rs 9,300 crore in fiscal 2024 to Rs 6,105 crore in fiscal 2025, there is no major crystallisation of liabilities expected over the medium term. Nonetheless, this will be closely monitored. |
Liquidity Strong Liquidity is supported by cash and bank balance of Rs 10,429 crore as on June 30, 2025 (with ~Rs 7,782 crore in RERA cash) and strong committed receivables of Rs 37,224 crore as of June 2025, adequate to cover the entire pending construction cost of about Rs 23,500 crore and debt obligations. Bank limit utilisation averaged 62% for fund-based lines (sanctioned limit of Rs 5,300 crore) and 67% for non-fund-based limits (sanctioned limit of Rs 1,261 crore) in the six months through June 2025.
Financial flexibility is supported by track record of raising funds (debt and equity) from national and international investors, banks and financial institutions and from a portfolio of leased assets and a large land bank. Cash accrual, cash and equivalents, and unutilised bank lines should be sufficient to meet the debt obligation as well as incremental capital expenditure (capex) and working capital requirement. For the rental business under DCCDL, cash accrual is healthy, backed by a steady rental portfolio and amortised repayment structure of the debt. Crisil Ratings continues to factor in the annual dividend that DLF will receive from DCCDL, which will further cushion liquidity.
ESG profile The environment, social and governance (ESG) profile of DLF supports its strong credit risk profile.
The real estate sector has a significant impact on the environment as a result of high emissions, waste generation and impact on land and biodiversity. The impact on social factors is reflected in labour-intensive operations and safety issues on account of construction-related activities.
DLF continues to focus on strengthening various aspects of its ESG profile.
ESG highlights:
There is a growing importance of ESG among investors and lenders. DLF’s commitment to ESG principles will play a key role in enhancing stakeholder confidence given its high share of foreign portfolio investor shareholding and access to capital markets. |
Outlook Stable Crisil Ratings believes DLF will generate healthy cash flow through new launches and liquidation of inventory while continuing to benefit from its strong market position. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company DLF is one of the oldest and largest real estate companies in India, with more than seven decades of track record. DLF has developed more than 158 real estate projects and developed area of over 340 msf. It has a diverse asset portfolio across the real estate segment and is expanding its presence across the country. The company has experience in developing real estate projects across business and customer segments. |
Key Financial Indicators
*Crisil Ratings adjusted numbers |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
&Total limit of SBI is Rs 415 crore (fund-based Rs 315 crore and non-fund-based Rs 100 crore). Non-fund-based limit is interchangeable with fund-based limits
Annexure - Details of Rating Withdrawn
# Yet to be issued |
Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||
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Criteria Details
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