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Hidden Gem - Max Estates

ICICIdirect Research 24 Jan 2025 DISCLAIMER

Max Estates, is the real estate arm of Max Group, primarily focused in the Delhi-NCR region across residential and commercial developments. Its focus on premium residential and commercial development assets along with cash surplus balance sheet is yielding uncanny resemblance as “Oberoi of NCR region”.

It benefits from its exclusive strategic partnership with New York Life Insurance (invested till date almost ₹ 1200 crore) for its commercial projects.

It has turned net cash positive (₹ 54 crore) in Q2FY25 led by monetization of stake in couple of assets (₹ 392 crore), QIP fund raise (₹ 800 crore) and warrants issue (₹ 150 crore). Excluding lease rental discounting, it has a net cash surplus position of ₹ 600 crore).

Its residential portfolio comprises 6 projects with an aggregate GDV of almost ₹ 21000 crore (sold portion ~₹ 6800 crore) including its latest acquisition of 2.6msf of mixed-use development in Sector 105, Noida.

Consequently, it has a strong launch pipeline for the next 2-3 years of ₹ 14000+ crore. On commercial front, it has 4 operational assets (~1msf) and four under-construction assets (including latest acquisition, ~4.8msf), which provide annuity rental income potential of over ₹ 700 crore compared to ₹ 66 crore in FY24.

On business development front, it would continue to target atleast 3msf acquisitions across residential and commercial verticals per annum which would be well supported by its strong war chest of ~Rs. 1350 crore raised through QIP fund raise, warrants issue and monetisation of 49% stake in Max Towers & Max House.

At CMP of ₹ 531, the stock is trading at 3.9x P/B on FY2027E and 15% premium to NAV. We value MEL on SOTP basis and ascribe higher premium to NAV (considering its aggressive BD) to arrive at a price target of ₹ 741. We have a BUY rating on the stock.

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