The largest real estate company by market share DLF Ltd is planning to raise Rs 10,000 crore over the next one year. The shareholders will pass an enabling resolution to this effect in the next annual general meeting which will be held on September 30.
According to a DLF spokesperson, “This is a normal procedure to raise money. We need the shareholders approval to raise money. This process authorizes us to raise money upto Rs 10,000 crore.”
The real estate company may not raise the absolute amount. It may raise funds for a smaller amount. The resolution is valid for one year, until the next AGM takes place.
With a size of Rs 84,909 crore DLF is the largest real estate company in India. In July this year DLF said it would buy back up to 2.2 crore shares at a maximum price of six hundred rupees per equity share. It has allocated one thousand one hundred crore rupees for the purpose, and would be financing the same through internal resources.
The company is planning to buy the shares through open market purchases through the stock exchange route. The buy back of shares will help increase the earning per share (EPS). This will also lead to a reduction in the price earning (PE) ratio. A lower PE always pushes up the stocks. High stock prices always work to a company’s advantage when it wants to raise funds.
The buyback proposal follows a sharp dip in the company’s market value over the recent past, which saw its share price plunging to below the issue price of five hundred twenty five rupees, at which the company had sold shares to public about a year ago.
At one point of time, the shares were trading at over double the public offer, but it has dropped to less than half of the life-time high of One thousand two hundred twenty five, scaled on 15th January this year.
If DLF buys back the entire 2.2 crore shares as planned, the holding of its promoters, KP Singh and family, would rise to about 89.5% from 88.2%.
DLF is developing various projects in Gurgaon, Chennai, Indore, Rajarhat and Kochi.