May 15, 2009 (The Hindu Business Line) --

The stock has jumped 11 per cent in the last two days.

It attracted interest after promoters sold 10 per cent stake.

Punters were seen placing bets on a possible merger between DLF and DAL soon.

According to a section of market analysts, stake sale by unlisted DAL – in which apart from Indian promoters, overseas investors DE Shaw and Symphony Capital have stakes – would increase liquidity for DLF in the form of arrear payments. Another section, however, doubts DAL’s ability to clear total dues to DLF.

According to MF Global (NYSE:MF) , the stake sale would give DE Shaw an exit route and an appropriate opportunity to fund DAL’s assets in the current market scenario. It said the move would also help to reduce receivables of Rs 15-16 billion in the books of DLF.

“However, DLF’s receivables will still be substantial, reflecting stress in DLF’s books,” it added.

However, ICICI Securities analysts said the cash inflow would improve DLF’s liquidity, which would help the company meet its capital commitments towards construction and reduce FY10E net debt to Rs 134 billion from Rs 144 billion.

“Further, our earlier expectation of DLF using Rs 12-13 billion to buy a minority stake has diminished. This helps mitigate our key concerns on balance sheet and deteriorating liquidity,” the brokerage said in a recent note.

The company is in the process of hiving off its non-core assets, such as wind power and hotel businesses as also three land parcels, which not contributed to the bottom line significantly. The proposed sale might result in generating substantial cash (Rs 55 billion according to I-Sec estimates), but a lot would depend how the company was able to raise to reduce the debt, analysts thought.

The analysts also did not want to factor in a possible IPO by DAL in the near future.