UPDATE 1-UBS expects 'no material impact' on DLF from activist accusations


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MUMBAI, Oct 11 (Reuters) - India's biggest propertydeveloper DLF Ltd was likely to suffer no materialimpact from accusations by anti-corruption activists of improperdealings, and the issue had been largely priced in to the stock,UBS said.

Activists from India Against Corruption (IAC) on Fridayaccused DLF arranging favourable loans and real estatetransactions to Robert Vadra, the son-in-law of ruling Congressparty chief Sonia Gandhi.

The anti-graft group also accused DLF on Tuesday ofreceiving undue favours from the government in the northernstate of Haryana.

DLF shares slumped 11 percent by Wednesday's close, wiping$920 million off its market value. DLF and Vadra have denied theaccusations. Harayana state officials also denied theallegations in local media.

"With the stock down 11 percent on the back of this newsflow, and our expectation of no material impact on DLF'sbusiness - we believe concerns are largely priced in," UBS saidin a note dated on Wednesday.

UBS added the allegations against DLF would be difficult toinvestigate given the issues were "politically motivated" andhad happened three to four years ago. The linkage of politicianswith real estate developers had been a common concern in thesector, it added.

IAC activist Arvind Kejriwal, who announced both sets ofallegations, is setting up an anti-corruption political party.

UBS maintained its 'buy' rating on DLF, saying the stockoffered "an attractive risk-reward opportunity" given potentialinterest rate cuts by the central bank and possible early debtreductions following asset sales.

Goldman Sachs, however, took a more negative view on DLF'soutlook, downgrading the stock to 'neutral' from 'buy'.

Goldman warned slower regulatory approvals could result infewer project launches, while cutting its pre-sale estimates forIndia's largest property developer, in a note dated on Thursday.It did not discuss the IAC allegations.

DLF shares were up 1.4 percent as of 0600 GMT on Thursday,outperforming a 0.2 percent fall in the NSE index .($1 = 53.1350 Indian rupees)

(Reporting by Rafael Nam and Abhishek Vishnoi; Editing byRichard Pullin)


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