Great news
Exceptional loss in Q2 and Exceptional profit in Q3
At least YoY will be comparable (Not accounting for sale of part of Max Towers)
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Q2 Earnings conference call Transcript :
Press Release of Max Square :
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Max Estates has leased approximately 62,500 sq-ft at its Max Towers in Noida to Yes Bank, which plans to relocate its offices from the Central Business District to the new location as part of its exercise to rationalise cost.
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Checked with IR and this is not a new lease. This is the same “private bank” lease which was referred to in Q2 FY21 Investor Presentation. Apparently, Yes Bank agreed for its name to be disclosed now.
Maxvil AR is out - https://www.maxvil.com/wp-content/uploads/2020/12/MaxVil-AR-2019-20-final.pdf
Pharmax AR - https://www.maxvil.com/wp-content/uploads/2020/12/Pharmax-Corporation-Limited-–-Financials-2019-20-1.pdf
AGM on Dec 30th.
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Thanks for checking and clarifying here. Even I had my doubts and somehow thought it was a foreign private bank.
Came across a tweet recently (may very well have been from one of you):
#Maxvil
Expect annual rental income from Commercial Real Estate to reach 50cr in 6 months, 100cr in ~2 yrs.
Office CRE is valued at Cap Rate of 8%, implying a valuation of ~1200cr for CRE biz.
Films biz, I value it at ~450cr.
Intrinsic value >1600cr
Current MCap ~650
Does it make sense? Please argue for / against the point made.
Hi white hat,
My 2 cents. While it looks like a standard to value CRE based on cap rate, I think we need to discount the debt at the individual project level as well during valuation. Around 300-350 cr of debt for Max House Phase - I and II, Max Square put together? So on a conservative basis, valuation is around 900-1000 cr for CRE?
Also, these calculations don’t consider the potential upside of Delhi One project and couple of other distressed assets the management is evaluating in Gurugram.
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Is it better to invest in such companies like Max V for commercial real estate or REITs like Embassy/Mindspace? What edge does max has over these well governed REITs?
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Hi Padhu,
Do you have rough calculations in mind for distressed projects / Delhi one project?
I’m planning to stay invested for the next 3 - 5 years. Just looking to hear others opinions on the story yet to unfold.
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My 2 cents. Which one is better to invest is anyone’s guess.
Max Group has a decent governance track record.
Mindspace -> Hyderabad/Mumbai/Pune/Chennai
Embassy -> Bengaluru/Mumbai/Pune/NCR. NCR is 3.4 msf out of their 25+ msf portfolio. So not their primary area of interest.
Max Estates is trying to create a differentiation in Delhi-NCR region in CRE and that is where their edge is IMO. Having been based out of Delhi-NCR for past 2+ decades, they understand the micro market reasonably well and is their area of focus. The other major players in this region in the listed space are DLF (NCR centric)/Godrej (Mumbai centric)/Embassy (Bengaluru centric) which are diversified across geographies and various asset classes within RE (residential/offices/hospitality/malls). Will they be successful or not? Only time will tell.
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Hi white hat,
I have shared by notes of Delhi One earlier here - Max Ventures – A Unique Demerger Opportunity
Management didn’t divulge much information on the other opportunities in the previous concall. All they said is hopefully they will be able to provide update on at least one of them (apart from Delhi One) by March 2021 once there is some good progress.
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Ravi Vachani of the promoter group has started buying from open market. Let’s see how the market reacts to this news.
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Max Speciality Films to invest Rs 600 MnMax Speciality Films to invest Rs 600 Mn.pdf (883.5 KB)
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A Long-Term play on Commercial Real Estate; Packaging Films business in a Sweet
SpotSMC Global Institutional Equities-Max Ventures & Industries Ltd.pdf (861.9 KB)
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Something I found while doing a routine google search:
The article says that final approval was due on November 23rd 2020. Hope there are no delays in the process.
Next hearing on Delhi One NCLT case is on Jan 12th 2021 - https://nclt.gov.in/interim-order/157312
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Next hearing on 15th, 16th and 17th February! You think it will happen by the end of FY2021? Seems doubtful…
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Hi, that was me on twitter. I joined VP recently & this is my first post.
Now the above mentioned ~1600cr is the valuation (with zero net debt currently & ~100cr projected net debt in 2-3 yrs for the CRE biz), which is on the table and is seen today. But there 2 other significant parts which will take the valuation to another level.
The unleveraged RE balance sheet (current net debt zero) allows headroom to take on debt and double RE assets at D:E of 1:1. (Value added would be >400cr IMO)
Secondly, all future rental income gets re-invested, per managment’s guidance, at the hurdle rate of >15% IRR on asset level, or Equity IRR of >20% at approx D:E 1:1.
Hence, Maxvil becomes a compounding machine at ~20% per annum after 3 yrs. So essentially, you buy something today for 750crs, whose value will be >2000cr in 2-3 yrs and after that it will compound at >20% p.a., if all goes well.
The moot point is whether Maxvil will be able to get opportunities to reinvest at 15% Asset IRR. Market is in equilibrium as long as Asset IRR >12%, as below that level nobody would find it attractive to develop the asset. A player who can command >25% premium to market rates, as Maxvil already does, will always be in the game because an asset giving 12% IRR to others will give 15% IRR to Maxvil. Maxvil’s clearly spelled out strategy is to command premium by virtue of its product & service quality.
Apart from this, there is the Asset management biz. That too, will command decent valuation in future.
Disclosure: Invested
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All calculations look excellent but will they translate to small retail investors or PE players or next deal of max group? Is company taking right decision for retail investors?
Disc: was invested for very long term but sold as felt benefits of business not coming to retail investors, hence biased. Not a buy/sell recommendation and maybe wrong in my assessment
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