Max Ventures and Industries Ltd was formed in 2016 as a result of the demerger of Max India along with the legacy business of Max Speciality Films Ltd . The company had two business segments in 2017—the real estate and the packaging films business. Subsequently, in 2017, Toppon Printing Japan became a strategic partner by picking up a 49% stake in Max Speciality Films for about Rs 200 crore. In a recent earnings call by the company, the management announced the highlights of the recent sale transaction of the packaging film business and the strategy rationale behind the deal. Max Ventures has entered into a definitive agreement to divest 51% stake in Max Speciality Films to Toppon Printing for an all cash deal of between Rs 600 to Rs 650 crore. Since, Toppon already owns a 49% stake in the packaging films business, it would eventually become a 100% owner of Max Speciality Films Ltd. Toppon would also be taking over the debt of Max Speciality Films Ltd as part of the deal for which Max Ventures expects the deal closure in the next few months. The rationale behind this sale transaction was to create a focused specialised business in the real estate sector. Since, the packaging films business has been posting a strong business performance in the last few years, the company believed it to be a right time to procure a fair value for divestment . This would enable Max Ventures to emerge as a pure real estate play and shift the company’s entire focus and resources on the commercial and residential real estate in the NCR region. Post the divestment, the company intends to rechristen its name from Max Venture and Industries to Max Estates. With an expected war chest of over Rs 1000 crore, Max Ventures would acquire and develop prime land parcels in Delhi and the NCR region and expand the real estate business. The company posted a 30% yoy increase in consolidated revenue (including both the real estate and the packaging business) for Q2FY22 to Rs 376 crores. The management is extremely bullish on the real estate sector and expects good rental and leasing completion for their Max Towers, Max House and Max Square projects. Incidentally, New York Life Insurance company which is one of the oldest insurance companies in the US having an investible corpus of more than $600 billion is a investment partner in India for the real estate business by being a shareholder owning 23.5% stake in Max Ventures. The Max Ventures stock can be accumulated by portfolio investors at the current market price of Rs 125 and fund managers and analysts expect the share to double in the next 18 months time frame.
But investors can check their risk profile and do their independent due diligence before buying the stock, as it is not a buy recommendation.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.