Veritas tears apart realtor DLF; alleges profit inflation

Canadian firm Veritas Investment Research, in a report released on Thursday, has slammed the practices of debt-laden property developer DLF.

Veritas said DLF shares are worth just Rs100 apiece in a 'best case scenario', which is 53 per cent below the stock's closing price on Thursday. In its report titled A Crumbling Edifice, it has also raised doubts about the company's disclosed book equity and asset base.

Veritas, which is known for its sharp criticism of companies across markets, and has earlier torn into Reliance Industries Ltd, Reliance Communications, and Kingfisher Airlines.

Now it has called the accounting practices at DLF ''conflicting'' and pointed to gaps in its business model.

The report, authored by Research Head Neeraj Monga and Analyst Nitin Mangal, said, "DLF has undertaken questionable related-party transactions to boost the value of DAL (DLF Assets Ltd) prior to its acquisition by DLF, thereby subverting the interests of minority shareholders via a higher purchase price for DAL."

It said the company was now divesting the same assets. Veritas, while talking of DLF's stock price declining 57 per cent within five years of the IPO, said it was a case of a ''dream gone sour''. In the same period, the Sensex gained around 28 per cent, the report said.