Last Updated Date: 27/02/2025
| Ticker | DLF |
| Company Name | Delhi Land & Finance (DLF) |
| Shariah Compliance | Compliant |
| DP-Ratio | 6.01% |
DLF Limited is an India-based company, which is primarily engaged in the business of real estate development. The operations of the company include all aspects of real estate development, from the identification and acquisition of land, to planning, execution, construction, and marketing of projects.
The Company is also engaged in the business of leasing, generation of power, provision of maintenance services, hospitality, and recreational activities. Its housing portfolio ranges from luxury residential complexes to smart townships. Its offices portfolio is an integrated mix of office spaces with food and beverage and leisure amenities.
It has developed approximately 27.96 million square meter residential area and 4.81 million square feet retail space.
Let’s have a look at the operating segments from which the company derives its revenue and apply the Shariah screens to them:
Operating Revenue: (All figures in Lakhs of INR for the Year ended 31st March 2024)
| Segments | Revenue | Non-Permissible Revenue | % of Non-Permissible Revenue | Non-Permissible Segment Classification | Comments |
| Revenue from sale of land, plots, constructed properties | 515,041.06 | – | – | – | – |
| Revenue from services and maintenance | 25,509.94 | – | – | – | Construction service |
| Revenue from hotel, food court and recreational facility business | 53,592.12 | 1,784.62 | 3% | Alcohol Sales | The Revenue also includes sales of Alcohol Beverages. |
| Rental income | 30,777.83 | – | – | – | Refers to the Rental income derived from various office and retail spaces |
| Amount forfeited on properties | 536.74 | – | – | – | – |
| Interest Income | 40,630.46 | 40,630.46 | 100% | Conventional Interest | This includes Interest generated from Bank Deposits, Customer balances, loans, and Debentures. All Interest generated by the Company is considered operating in nature. |
| Miscellaneous income | 3168.84 | – | – | – | Misc income |
| Share of profit in associates and joint ventures | 109,312.81 | – | – | – | Refers to their Investments in their Associates, who are also in the Real Estate Space |
| Sale of Investment property | 17242 | – | – | – | Sale of their Property |
| Total | 755,181.34 | 42,415.08 | 5.33% | Interest Income and Alcohol Sales |
Segment Breakup
Revenue from Sale of Land & Plots: This segment would include income from selling undeveloped land or plots to individual buyers or developers.
Revenue from Constructed Properties: This segment would capture income from selling completed residential or commercial buildings like apartments, villas, office spaces, or retail stores.
Revenue from Other Development Activities: This is a broader category and could encompass various income streams related to their development projects. This Revenue is further divided as follows:
- Development Fees: Charges levied by DLF for planning, designing, and infrastructure development associated with their projects before construction begins
- Construction Management Fees: Income earned if DLF manages the construction process for third-party projects
- Value Added Services: Revenue generated from offering additional services to buyers, such as property management, clubhouse memberships, or interior design services.
Revenue from hotel, food court and recreational facility business: This refers to the income generated by DLF Limited through leasing out space within its commercial properties to businesses operating in the hospitality, food and beverage, and other related sectors.
Rental Income: DLF generates substantial revenue from its rental business by leasing office and retail spaces. This provides a steady stream of income and contributes to the company’s financial stability.
Tricky Areas From a Shariah Perspective
When it comes to Real Estate Based Companies such as DLF, the main concern that arises from such a business is their involvement in the Hotel and entertainment space, where the provision of Alcohol and bars is also included. Based on our assessment of the Company’s projects and analysis of their Financials, we have derived a conservative 3% of revenue to be contributed from Alcohol in this space.
Furthermore, the rental income of the company is also an area of concern, since there also could be rental income derived from tenants who are engaged in Non-Shariah permissible activities. As per the latest reports of the Company, the rental income is derived from the office and retail spaces, with a major chunk of the revenue coming from the Apparel/Accessories sector, and questionable areas such as “Entertainment” only contributing up to 4% of the retail rentals. Since this is a grey area, it is to be noted that while we have assessed the concerns in such areas, there is not enough information or evidence to indicate non-permissible tenants. Hence, we have not assumed any revenue from the rentals to be non-permissible.
Let us look into the Non-Operating revenue of the Company.
| Segments | Revenue | Non -Permissible Revenue | % of Non -Permissible Revenue | Non -Permissible Segment Classification | Comments |
| Dividend income from shares/ mutual funds | 71.28 | 35.64 | 50% | Non-Islamic Investment | Investments in Mutual Funds |
| Fair value gain on financial instruments at fair value through profit or loss | 901.36 | 450.68 | 50% | Non-Islamic Investment | Investments in Equity and Mutual Funds, from which Mutual Funds have been considered Not Compliant |
| Profit on sale of investments | 5505.67 | 5505.67 | 100% | Non-Islamic Investment | Refers to the Sale of Mutual Funds |
| Net gain on disposal of property, plant and equipment | 357.66 | – | – | – | Sale of Capital Goods |
| Total non-operating income | 6,835.97 | 5,991.99 | 87.65% | – | – |
It is clear from the table above that the non-operating income of the company includes Derivative income which is Shariah not compliant. This amount is included for the calculation of the Dividend Purification.
Sector Compliance Calculation:
| Total Operating revenue | 755,181.34 |
| Non-permissible revenue from main operations | 1,784.62 |
| Interest income | 40,630.46 |
| % of non-permissible revenue | 5.33% |
| Sector compliance | NOT COMPLIANT |
Dividend Purification Calculation:
| Revenue Description | Non-Permissible Revenue |
| Non-permissible operating revenue | 42,415.08 |
| Non-permissible non-operating revenue | 5,991.99 |
| Total non-permissible revenue | 48,407.07 |
| Total revenue of the company | 805,146.96 |
| Dividend Purification Ratio | 6.01% |
Financial Ratio Screen:
(All figures in Lakhs of INR for the Quarter ended 30th September 2024)
| Amount | Remarks | |
| Market Cap | 1,435,581.776 | – |
| Total Debt | 42,897.6 | – |
| Debt Ratio | 2.99% | – |
Source: All the above information is based on the website of the company and the latest Annual Report for the period ended 31th March 2024.
Conclusion
Given the above information, we at Islamicly believe that Delhi Land & Finance (DLF) Ltd is a Shariah Not Compliant company as per our screening criteria.
