Investment Case –

  • Max Estates is on a mission to deliver 10,00,000 sqft of Grade A Commercial Office Space in the NCR region EVERY year.
  • These buildings are not future proof, but the future itself.
  • Grade A office space are a fantastic rent yielding asset that the likes of Blackstone, Brookfield and Singapore’s GIC are after. By the end of this year they would have 42,000 cr , 28,000 cr and 28,000 cr respectively invested primarily into commercial office space in India.

Why I think Max Estates can do it –

  • The model that Max follows in one of “No Land Leverage.” They are on a mission to create buildings, ownership is not a primary mission for the company.
  • Since the company is not looking at buying land and leveraging land, most of their borrowings will be pure play working capital loans, mostly as loans against rentals.
  • Their first project Max Towers at Noida will yield a cool rent of 60 cr a year from 2020, taking the asset value to about 850 cr. (Current M.Cap is 650 cr and enterprise value is 775 cr)
  • For longer patient capital, they will be partnering with the likes of Apollo Global.
  • The Max Group in NCR with Analjit Singh at the helm is akin to Godrej Properties in Mumbai. The deal pipeline and distressed opportunities that come their way is replicable by very few others.
  • This is probably the last company Analjit Singh will be involved in creating in his illustrious life and like he confesses, he has always had a Khurrak (itch) to do something in real estate and construction as that was his original family business.
  • Max will continuously raise equity at good valuations and yet keep the promoter stake the same, by probably merging Analjit Singh’s personal assets into the company. Godrej Properties has diluted the non-promoter equity interest by about 40% and managed to keep the promoter shareholding about the same in the last 5 years. It is a great win-win strategy for the promoters and market capitalization.
  • Intangibles – Real estate is a dirty & murky business in which goodwill, fear, reputation and power are fantastic intangibles to have. In many cases way more important than money and the Max Group has it. This company will leverage that.

Promoter Pedigree –

  • Sahil Vacchani, the CEO of Max Ventures comes from a hardcore manufacturing background. His family once owned Weston – the popular TV brand. Sahil also had ownership and a huge role to play in Dixon Technologies. He sold his stake to join Max Ventures after he took up a full time role as CEO. He is also the son-in-law of the stalwart Analjit Singh. This combo is on a mission to MANUFACTURE grade A office space at a grand scale in the NCR.

Current Projects

  • Max Towers – 6,00,000 sqt valued at about 800-1000 cr.
  • Max House Okhla – 1,05,000 sqft exclusively leased to WeWork valued about 150 cr.
  • 222 Rajpur – 50% sold and all cost of construction completed.

Other Entities in MVIL

Trends in Commercial Office Space

  • The last big game changer for commercial office space was the elevator.
  • The current big gamechanger seems to be killing the cubicle and making spaces that everyone can use.
  • Coworking is a great catch word, but fundamentally the funda is moving from command and control to engage and collaborate.
Circle is a representation of democracy, engagement and collaboration.

Valuations and my Absurd Projections

  • I don’t believe there is a good way of being able to account for intangibles or a way to project them. In real estate especially where the business is basically a bunch of non-repetitive projects, the bigger target is very crucial. The size of the pond that max is interested is the Delhi NCR region which is 1,500 sqkm.
  • Grade A office space cannot really be created overnight and neither can you easily modify old buildings to make them what the future needs. Ownership of most old buildings, is fragmented which makes the task even more difficult.
  • I think Sahil Vachani’s target would be to build a half a billion dollar business in the next 5-7 years. Yup, 3,500 cr market value ! That is about 6x from here. I have been dead right about NBCC and Godrej Properties in the past.
  • As this is a pretty =illiquid counter, i suggest you buy in and increase investment as each building starts yielding rent or each investment is exited.
  • This counter requires extreme patience and has a huge payoff if things go right, and you don’t lose more than 25-30% if the company completely shuts down ! -0.3% to a +600% a good bet to me.
  • I have not covered the misc investments and speciality films business in detail as they will mostly be providing cash for the RE business once they are debt free and exited.

8 replies on “Take a real adventure with Max Ventures !

  1. Nice article Nitin! 👍 The company seems to be well positioned to grow through commercial RE investments in Delhi NCR region. Max Specialty Films is also a good opportunity in terms of recyclable packaging through BOPP films considering the govt push to ban single use plastic.
    I would also like to share couple of points based on my understanding! In Nykaa, they already divested a significant portion in last one year and they now hold close to 0.5% of the total company! On a ballpark basis somewhere around 15 cr. Maxvil’s stake in Azure (17% stake for 70 cr when they invested) is somewhere close to 200 cr as per the latest Annual Report. Please correct me if I am wrong.

    Disc: Invested in Maxvil.


  2. Hi Nitin,

    Thanks for your insightful post. I have a few queries, which are as follows :

    i) My query is related to the capital allocation skills of the promoter. I see that 91.33 % of the promoter’s share(i.e. 28.32 %) of Max financial is pledged. Do you know the reason why? The promoter of both entities i.e. (Max financial & Max ventures) being the same, do you see any risk(in my opinion, risk of re-occurrence of such events in Max Venture entity is high and impact on valuations as well , as they, say old habits die hard)

    ii) We Work in trouble ( & It’s impact on Max House Okhla – part of which is exclusively leased to WeWork .

    iii) “No Land Leverage.” Do you mean that they will partner with landowners and not invest in land and just focus on building development, promotion, marketing & maintenance?

    iv) Max will continuously raise equity at good valuations and yet keep the promoter stake the same, by probably merging Analjit Singh’s personal assets into the company.
    Query : Can you elaborate further on this or give reference to this concept.


  3. 1. I checked with the IR team and they say no shares of ventures are pledged. Please check with the same.
    2. We work model is basically a plug and play model. It will be pretty easy to give this out on lease to any other coworking player or even run it by themselves. Rental yield should not be affected, but in case they wanted to monetize the asset with we-work as a tenant, the premium would definitely be reduced.
    3.Yes. They are not going to be hunting for greenfield land and starting projects from scratch with their own money. If they start from scratch it will be investor money. If they are putting their own money, it’s more likely to be a distressed project. This forecast is on a very limited past.
    4.Look at the history of analjiot singh and you will notice how he is an expert at raising equity at good valuations and more importantly at the right time. A good example is the way Godrej Properties has continuously undertaken capital raise very strategically.

  4. We Work contact had been broken for Max Okhla.
    But they will find other easily

      1. They mentioned in the concall for Q2 FY20 that Max Ventures themselves have terminated it since there is uncertainity about the financial health of both WeWork (global) and WeWork India.

  5. 27 28 is good price to enter for 4 to 5 years investment….. Buying slowly from 30. Same is the case with Nesco limited

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