I agree to all that you say, but waiting patiently in a company where promotors want to stay in business and only uncertainty is value unlocking…is reasonable to me…like say a Tata global some 1-2 year back or more…comparing it to a max India or max financial where promoters want to leave and even not sure what business remain in listed entity or not, how restructuring happens and what not and same in max ventures where someone pointed out clearly that a sub 1000 cr company having as complex structure as a big large cap …I would rather keep my patience for the cases where promoter and business clarity is more…
Having said that, it’s a personal choice on what kind of business one is comfortable with to hold patiently…
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So wonderfully and pithily expressed.
Especially, it’s very challenging to forecast the earnings on RE business - leasing / sales income seems to be ad hoc and suddenly shows up in one quarter.
However, having said that, I remain invested and is top 5 holdings because I feel clarity will emerge in a year or so as they have more RE projects and things hopefully normalises. And as someone pointed out above that promoters average price was Rs. 60.
I exited other Max holdings as I couldn’t keep track of all JVs , partnerships and exits.
On promoter part, difference in Max Ventures is that Sahil is more instrumental than Mr Analjit Singh.
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How is this inferred? Analjit singh created the erstwhile max India from scratch. He is now also very sharp and good at deal making etc.
Yes. In case of Max Ventures, operationally Sahil is more involved and also empowered to make decisions. Of course Analjit is still involved and perhaps calling shots but to lesser extent compared to other group companies is my view.
Remember reading this a while ago which touches some aspects of the relationship.
Investor Presentation Q3 - FY21
Highlights:
- NCLT hearing progressing well, but slowly
- Announcement of new office development project in coming quarters (as against “Q4 FY2021” in last presentation)
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Mr. Shah wanted to know if the management wanted to split the Co. into speciality and real estate businesses to unlock value as the share is highly underpriced.
Management said that the market had a mind of its own and they had taken a lot of steps that they felt were in the right direction and hopefully the results would be seen in the coming quarters.
One could tell that there was a lot of tension and there was a lot of talk that went back and forth. Hence the lol.
Nothing extraordinary.
NCLT hearing is going on.
Max house Okhla phase 2 to begin in H1 FY2022.
They should hopefully announce 2-3 brownfield / Greenfield projects in the coming months.
Management is comfortable with 50:50 or even 60:40 debt to equity in real estate biz.
Specialty films to continue good performance over the medium term.
Did anyone else listen in? Anything major that I missed?
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Management guidance:
Max Towers - Revenue of 35-40 cr per annum once ~3 lakh sft which belongs to Max Estates is leased completely. Lease revenue of CAM/DBS/Yes Bank will accrue from Q1 FY22.
Max House Phase-I - Revenue of 15-18 cr per annum on 100% lease. (35-40k sft of lease in advance stages of dialogue as per investor presentation)
Max House Phase-II guidance is similar to Phase-I.
Max Square - Based on prevailing lease rate in micro-market, around 70-75 Rs per sft… ball park of 65 cr per annum. Again, for the 51% share, roughly half of it is attributable to Maxvil.
On a side note, I share the same pain as Mr. Shah being invested in Maxvil for 3+ years 
Below was the management commentary on the same topic in AR 2018-2019
My doubt: Do they plan to sell MSFL few years down the line in addition to Azure at an opportune time and deploy the money into Max Estates for future growth? If this is the plan, then conglomerate structure right now might make sense. Any view from others?
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It’s all ifs and buts for now.
Any major restructuring is not practical at least for quite some time.
And even if it happens, what’s the guarantee for value unlocking?
Market is the master. Need to stay put for the long haul, I guess.
Ongoing project at max square is showing steady progress.
Specialty films tailwinds to continue for the next 4 quarters at least.
Max house phase 2 to start in the next few months.
NCLT approval (hopefully) will have been received in the next 6 months
Add to this the 2 brownfield / Greenfield projects
Azure hospitality should publicly list in the next 18 months or at least raise equity at a higher valuation by which time MaxVIL would have cashed out
All this, without significantly stretching balance sheet is worth something…
In my opinion, Don’t check this counter for at least the next 12 months 
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Investor presentation had mention about REIT. Any thoughts on how that will shape / help finding for MaxVIL.
Were there any questions around this on partnering with REIT?
I liked Maxvil’s Q3 concall. The two most significant things for me were:
- Management confirmed despite their hitherto conservative stance, a D:E ratio of 1:1 or even 60:40 to be targeted.
- Mgmnt confirmed things may come out in public domain in due course with regards to value unlocking.
My take on value unlocking is there is no way it could have been done in the last 2 yrs. Both RE & Films biz were not ready for it & it would make zero business sense. But within the next two years, they will be separated for sure. Anyone in doubt should just look back at Max group’s history which is full of such demergers & value unlocking exercises.
Post this concall, I once again revisit the valuation.
Mgmnt confirmed projected lease rental income of 100cr/yr in 2 yrs for ongoing projects. This implies a valuation of 1250cr on a conservative 8% cap rate (or rental yield).
(Note: some of the listed REITs trade at 7% rental yield which would imply a valuation of 1400cr)
Unleveraged, almost zero net debt, Max Estate balance sheet implies a value add of ~600cr when new CRE assets are added to reach targeted D:E ratio of 1:1.
(Note: The above is based on Cost of debt of 8% & Asset IRR of 16%, cap rate of 8%. Value add will be higher if D:E ratio of 60:40 is achieved as per guidance).
All future cash flows to be re-invested to add new asset at, per mgmnt guidance, Asset IRR >15%, or an Equity IRR >20%
(Note: Based on the same Cost of debt 8%. Please read quoted post below to see why Max should be able to achieve high teen Asset IRR)
Films Biz. - I value it at 400cr. Other investments, say 50cr.
(Note: Max Asset Services will be worth a few hundred crores as well in a couple of years but I will leave that out for the time being.)
Total value = 1250cr + 600cr + 400cr + 50cr = 2300cr or a target price of Rs 150 per share in a couple of years
So you buy something at CMP of Rs 52 which is worth Rs 150 in a couple of years and then grows at 20%/yr thereafter with very good stability
IMO Its a great compounding machine in the making selling for dirt cheap prices.
It is just a matter of time before some institution with a long term horizon gets in, scoops up say 5% equity from the market and then, given the low free float (<20%), stock shoots higher, away from the grasp of most who are waiting for the right time.
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Already NYLI is since decade in max group and in max venture right from beginning.
Only value destruction has happened in last few years in wait for value unlocking.
After years of wait & uncertainty, new management in max healthcare seem to be doing good though.
Half rental will go to JV partner, plus REITs trade at 7% rental yield because they are oblidged to pay regular dividends which are almost at 6% plus range. Max Venture is not paying single penny as dividend and will not for next couple years based on past and future earnings and expected way of growing etc.
Disc: Not invested, tracking for educational purpose. Not a buy/sell recommendation
Based on the management guidance, 95-100 cr/year from Max Towers/Okhla I & II/Square is the share of Max Estates. Total lease will be around 160 cr/year.
Concall notes @ Max Ventures – A Unique Demerger Opportunity - #283 by kvpadhu3390
So basically, total rental income ( 100% owned + 50% RE partner share ) comes to abt 100 crs. in next 3 yrs. Considering a 7% yield this valuation comes to Rs. 1400 crs.
Packaging business valuation already discussed extensively above so not going into details we take it as Max share as Rs. 500 crs.
So, 1400 + 500 = 1900crs. valuation avlbl today at 750 crs. Mkt Cap.
Is the understanding correct?
Court proceeding renotified to 22nd February. How inefficient are our courts.
I have attached the latest court order.
Is there a legal expert here? Can someone explain what’s going on?
SGM Webtech Pvt Ltd Vs. Boulevard Projects Pvt Ltd._6.pdf (4.3 MB)
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I am not a legal expert. But from what I understand, Noida authority filed a petition that they want the land back which was leased to BPPL in 2010 for Delhi One project since they defaulted on lease payments etc. The court didn’t agree to that and ruled in favor of Resolution Professional and Resolution Applicant (Max Estates).
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Understood. Makes sense if I read it now. Thanks.
So is 9th march the date of the final hearing? Or arguments can still be made by other parties?
Might not be the final one since there are a few petitions pending but I feel Max Estates is getting closer to approval with the Noida authority out of picture now.
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