Shares of real estate major DLF zoomed over 4 per cent today after a gain of over 5 per cent last Friday. The stock price gains were thanks to the Securities Appellate Tribunal (SAT) quashing SEBI’s October 2014 order. SEBI had banned the company and its promoters from raising money in the capital market.

The SAT order will enable the company to raise funds through instruments such as Real Estate Investment Trust (REIT) on its commercial properties including malls and office buildings. SEBI had earlier imposed the ban as irregularities were found in the company’s 2007 IPO filing.

Raising funds in the market is important for the company given its high debt. DLF’s debt stood at over ₹20,000 crore as of December 2014, up from ₹19,000 crore in June 2014. In the December 2014 quarter, net profit fell 10 per cent year-on-year. High interest outgo coupled with sales slow-down has been dampening profits and the company does not expect sales momentum to pick-up in the near term. So, any respite in the debt reduction front - through fund raising and asset sales - could likely brighten the company’s profit prospects.

While the order reversal is positive, the company has other legal hurdles. For one, the Supreme Court will soon decide on the penalty of Rs 630 crore imposed on DLF by the Competition Commission of India. Payment of this fine may add to the company’s debt. The other worry for investors is that the pending case is not an isolated case of legal action against the company by buyers.​

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