DLF shares stumble after HC cancels Gurgaon land deal

DLF shares dropped as much as 8.7 per cent a day after the Punjab and Haryana High Court set aside Haryana government's decision to allot land to the realty major in Gurgaon.

The Haryana government had allotted the land to DLF in 2010.

A division bench of the court on Wednesday directed the Haryana government to conduct an auction of the 350-acre land at Wazirabad in Gurgaon by inviting international bids within a month. DLF would be able to participate in the auction process.

"The company is awaiting a copy of the order and can offer detailed comments only pursuant to that," the company said in a statement. DLF said the land was for a project that was yet to be developed.

Reacting to the development, shares of DLF were trading 7.76 per cent down at Rs 168.85 in afternoon trade on the Bombay Stock Exchange.

The court ruling raises concerns about increased regulatory scrutiny on the company.

But, JP Morgan says the impact from actual land cancellation is "cash positive". It estimates overall cost for purchased land was Rs 25 billion ($413.56 million) of which DLF has already paid Rs 10 billion.

The brokerage said DLF would thus get a Rs 10-billion refund in case of eventual cancellation.