Max Ventures – A Unique Demerger Opportunity

(yourraj) #63

Nice Write-up @kashif_1461 .I would like to suggest to add your disclosure which is mandatory as per SEBI rules as well .Please don’t feel offended .

(kashif kidwai) #64

Thanks. I think i have mentioned earlier also. MVIL forms a major portion of my portfolio and I have been adding to it at levels below 80 recently as well.


(ajaychauhan) #65

Board approved to raise 450 crore via Right issues

(Mahendra.jain) #66

Any update on the price and date for rights issue?

(ajaychauhan) #67

No announcement yet, hopefully some clarity may emerge on the day of announcement of q3 results.

(jajushobhit) #68

The seem to have sold some business investments as the there is some 20cr EBIT from the segment.


(ajaychauhan) #69

max ventures hold 2% stake in nykaa, which at current valuation is worth 60 crore.
Anyone aware about what happened to the proposed right issue?

(niraj.dugar) #70

Max ventures sold out 1% in Q3. They only hold 1% now. Should have an update on the rights issue in the next board meeting.

(himanjim) #71

(Aditya Mehta) #74

(ajaychauhan) #75

max ventures filed draft right issue offer document with SEBI

(ajaychauhan) #76

Board meeting on right issue terms and conditions on 11/06/2018.

(Marathondreams) #77

June 22 record date for Rights issue. 67 shares for 66 shares held. (almost 1:1)

Since sectors in which Max Venture invests (Education, Hospitality) are dependent on economy with long gestation period, I am bit skeptical how this major dilution would be treated by market in current social political scenario. Hence I expect the stock to be under weather for next 2-3 years till the investments starts showing returns. Also political situation would be clear by that time.

(rajput.delhi) #78

Max Ventures is not into Hospitality. Education though an intended focus area, still is at planning stage. There main focus is real estate, packaging films and some financial investments incl in start-ups.

(Marathondreams) #79

max Ventures may not be directly in hospitality but they have made investments in hospitality sector i.e. Azure Hospitality

(rajput.delhi) #80

It’s just an investment and they could sell it tmrw like they sold some stake in Nykaa recently. Hospitality and Education are not the reasons why an investor would invest in Max. And therefore they won’t be the reasons for him to reconsider his investment thesis.

I remember vaguely that from the rights proceeds, Max would repay debt of 250cr and use 75cr in real estate construction and 25cr for buying property (part of Max House). So, investors would first consider improved balance sheet, lower fin cost and faster execution (sale and lease) of real estate projects for deciding whether to invest in Max or not. Then comes valuation of packaging unit. And in the end other investments like Azure etc. could be added for some small value largely bcoz the mortality rate in these businesses is very high…so they are best treated as an optionality and not amongst the main reasons for investment.

In addition, pricing rights issue close to prevailing price also signifies high confidence of management. And even though equity dilution is 100% it could well create far more value for equity holders due to lower debt and faster monetisation of 8 lac sqft of commercial real estate when sold or leased.


(ajaychauhan) #81

Can someone knowledgeable/experienced please explain if the stock price goes below the right issue price then most of the investor better of buying directly from the open market if at all they are interested in this counter, then in this case rights issues will not be fully subscribed. And the company will not be getting the full expected amount. Is there any lower limit to which right issue need to be subscribed to get it through? what happens in such case any real life examples of such cases anyone aware of?

(rajput.delhi) #82

Thinking optimistically, promoters will hope that this issue is not subscribed fully so that they can subscribe to the unsubscribed portion and take their holding as high as possible. This is another reason issue price is not very low compared to the mkt price, so most investors don’t subscribe, offering a good opportunity for promoters to increase their holding.


(Vivek) #83

Since rights will increase the equity base the prices will be under pressure mostly and it might take much time to get positive results from the company, Promoter increasing stake is nothing to be taken into positive off, as In Max India they increased stake at Rs 160 aroun per share and its now trading at Rs 85. Its better to wait and see how the businesses reports numbers and then invest , if you havent yet.

(rajput.delhi) #84

Max India’s valuation largely comes from Hospital and Insurance businesses (as sr living is still a promise and sustainable returns could be far away). These businesses are quite diff from Real Estate Development and Film Packaging. Hospitals as an industry are facing tough times though temporarily and competition in health insurance has increased drastically pressurising both growth and margins for Max India. So the price has fallen as a result of poor biz performance and outlook, not bcoz promoters bought stake at a high price or bcoz equity increased. Although, if Max Ventures price falls solely due to reasons quoted by you then it would offer a great opprtunity to buy a business which will have high-end commercial property fully developed in 2-3 years with near full occupancy (as these are prime properties in NCR so will get prime customers at prime rates and prime properties don’t remain vacant for too long. Besides Max Group companies will be a large user of these properties). And packaging films is a stable biz which will get the benefit of 49% ownership by Toppan, and the 50% capacity addition will result in higher sales and higher margins due to scale economies. And there fin investments are far more promising as demonstrated by partial sale of Naykaa stake. So almost all these businesses of Max Ventures are on a far stronger wicket with far brighter outlook compared to Max India. Markets will wait for execution and as that happens will assign right values to these businesses. But the execution risk seems far lower in developing and selling a prime commercial property than fighting competition and regulators in insurance and hospitals resp.
Sure business can turn negative but the chances of that happening should be evaluated based on its own merit and independent of a promoter’s other unrelated businesses as those are just some psychological biases we need to get rid of.