· Strong momentum in Commercial office leasing –Cyril Amarchand Mangaldas leases ~80k sq. ft., Yes Bank leases ~62.5k sq. ft. and DBS Bank leases ~7k sq. ft. at Max Towers.With this, Max Towers is now ~90% occupied.
· Packaging Films records highest ever quarterly revenue and EBIT;margin expands610 bps YoY to 15.8%; investing in metallizer line to enhance specialty output
13th February 2021, New Delhi:
Max Ventures & Industries Limited (MaxVIL), a part of India’s leading multi-business conglomerate, Max Group, operates across two core businesses of Real Estate in NCR and Specialty Packaging Films.MaxVIL announced its un-audited financial results for the third quarter ended 31stDecember 2020.
MaxVIL Q3FY21 Financial Highlights (YoY):
· Consolidated Revenueup 10% to Rs. 2,961 Mn
· Revenue from lease rental income of Max Towers up 19% to Rs. 50 Mn
· Revenue from packaging films business up 11% to Rs. 2,818 Mn
· Consolidated EBITDA up50% to Rs. 494 Mn&Consolidated PBT up 348% to Rs. 247 Mn
· Consolidated PAT up 90% to Rs. 127 Mn
MaxVIL Business Updates
MaxVIL witnessed a strong business recovery in Q3FY21 in its commercial real estate business with the signing of leases with reputed companies. The packaging films business Max Speciality Films Ltd. (MSFL) recorded its highest ever quarterly revenue and EBIT and continued its margin expansion and growth momentum on the back of strong business fundamentals, recyclability and specialty products.
At Max Towers, the company recently signed a lease for ~80,000 Sq. Ft with Cyril Amarchand Mangaldas (CAM) – a leading Indian legal firm. The company has also signed lease with DBS Bank for ~7,300 Sq. Ft. Earlier in the third quarter of FY21, the company had leased 62,500Sq. Ft. to Yes Bank.The total leased area at Max Towers now stands at ~4.7 Lk Sq. Ft. of the total net available leasable area of ~5.3 Lk Sq. Ft, implying an occupancy of ~90%. The leasable area attributable to Max Estates in Max Towers is now 94% leased.
MaxVIL also launched its Managed Office space business through its subsidiary Max Asset Services (MAS). The first Managed Office space offering, under the brand name ‘WorkWell Suites’, spanning 14,000 Sq. Ft. was launched at Max House Okhla Phase 1. MAS will provide complete managed office solutions and serviced office space to prospective tenants.
Max Estates’ second commercial complex Max House, which is ready for occupation also witnessed strong inquiries. The company anticipates being able to lease the building out within FY22. Work on Max House Okhla Phase 2 of the project is expected to be commenced in H1FY22.
Work on Max Estates’ third commercial offering – Max Square; a Grade A+ office space development with New York Life Insurance Company as a financial partner has also started. The company is expected to complete the project by Q4FY23. The distressed project – Delhi One, located strategically on the DND Flyway at South-Delhi – Noida border, which the company has bid for, as a part of the Insolvency and Bankruptcy Codeprocess, is undergoing hearings at the National Company Law Tribunal after the Committee of Creditors vote in favour of Max Estates.
The success of commercial office REITs in India clearly reflects confidence of institutional investors in attractiveness of commercial real estate as it continues to be an avenue for growth. It also reinforces that ‘Work from Office’ will be an integral part of workplace ecosystem on a sustainable basis including for IT/ITES companies who account for majority of underlying rental portfolio of the three listed CRE REITS in India.
MaxVIL’s packaging films subsidiary – MSFL continues to post uptick in performance in Q3FY21 on the back of strong demand. MSFL’s revenue for Q3FY21 stood at Rs. 2,818 Mn, up by 11% YoY. Its EBIT increased by 81% YoY to Rs. 446 Mn and EBIT Margins expanded by 610 bps YoY to 15.8% in Q3FY21 on account of stable realisations, benign raw material prices and higher volume contribution from more profitable value-added specialty films.
Overall, MaxVIL continues to have a strong balance sheet with comfortable Net Debt / Equity of 0.4x. Gross debt with that for packaging films business reduced by Rs. 740 Mn from Rs. 4,339 Mn in Mar-20 to Rs. 3,599 Mn as of Dec-20 on the back of strong free cash flow generation. Debt levels in Real Estate business is expected to be low as the company aims to partner with Institutional Investors as a part of its asset-light growth strategy.
Commenting on the performance, Sahil Vachani, MD & CEO of MaxVIL said, “Q3FY21 has been a strong quarter for our commercial real estate business while the packaging films business continues its robust performance. As the lockdown restrictions were eased during Q3, corporates are actively assessing their office space requirements. We are witnessing improved conversions from enquiries to actual leasing. The rapid pickup in leasing interest gives us the confidence to also lease out our second Grade A+ office project Max Housesoon, given its strategic location in South Delhi.
We believe the ongoing consolidation in Real Estate will continue to favour quality Grade A+ commercial developers with proven execution, strong balance sheet and access to institutional capital. With commencement of the Max Square project during Q3, we are expanding our footprint in Delhi-NCR commercial office market and moving swiftly towards becoming one of the top-Grade A+ commercial developers in this area. Towards this objective, we are actively scouting for greenfield and brownfield opportunities in Delhi-NCR with a positive bias for the high potential geography of Gurugram, while hoping for a timely and positive conclusion of IBC process for Delhi One.
Our packaging films business, MSFLcontinues itssolidperformance on the back of our value-added product strategy, move towards recyclability and stable raw material prices.COVID-19 has increased the consumer’s preference for packaged products as it minimizes the risk of infection and ensures healthy consumption. With specialised anti-bacterial productsco-developed with leading FMCG companies, a stable demand and better product mix, we expect MSFL to continue the strong performance.”
Key performance highlights of MaxVIL verticals are as below:
Max Estates Limited (MEL)
ü Max Towers, Noida
§ Total leased area at Max Towers stands at ~4.7 Lk Sq. Ft.; Leased area attributable to Max Estates stands at ~2.8 Lk Sq. Ft.
§ Marquee Leases include ~80k Sq. Ft. to CAM, ~62.5k Sq. Ft. to Yes Bank and ~7.3k Sq. Ft. to DBS Bank.
§ ~90% of the Max Towers is now leased; while leased area owned by Max Estates is now ~94% leased.
§ Max Towers continue to lease at premium rentals as compared to its micro-market.
ü Max House, Okhla
§ Strong leasing interest by corporates, expect to lease out entire Phase 1 office complex soon.
§ Phase 2 of the project; of similar size to phase 1 will commence constructioninH1FY22.
ü Max Square, Noida
§ Work for Max Squarecommenced during Q3 and expected to be completed by Q4FY23.
§ Max Square is planned to be a Grade A+ office project with F&B outlets and other amenities with a total leasable area of ~0.7 Mn Sq. Ft. with New York Life Insurance Company as a 49% partner in the project.
§ Total cost of development is estimated to the tune of Rs. 400 Crorescomprising of Rs. 175 Crores Equity & Rs. 225 Crores in Debt – funding for which has been secured.
Max Asset Services Limited (MAS)
§ MAS will do the entire fit-out and lease it to prospective tenants as a complete managed office and facility serviced office space.
§ Revenue for MAS in Q3FY21 stood at Rs. 27 Mn as compared to Rs. 20 Mn in Q3FY20, up by 33% YoY.
Max I. Limited
§ Max I. continues to engage with promising Real Estate tech companies to enhance the experience at its existing projects.
Max Speciality Films Limited
MSFL | Q3FY21 | Q2FY21 | Q1FY21 | Q4 FY20 | Q3 FY20 |
Revenue (Rs. Mn) | 2,818 | 2,667 | 2,512 | 2,339 | 2,530 |
EBIT (Rs. Mn) | 446 | 401 | 400 | 218 | 246 |
EBIT Margins (%) | 15.8% | 15.0% | 15.9% | 9.3% | 9.7% |
Volumes (MT) | 17,177 | 16,822 | 16,258 | 15,003 | 16,169 |
§ MSFL volumes increased by 6% YoY to 17,177 MT in Q3FY21. Focus continues to be on enhancing output ofvalue-added specialty products.
§ Value-added specialty films contributed 45% to total Volumes in Q3FY21 vs. 42% in Q3FY20 and 44% in Q2FY21.
§ Value-added specialty films contributed 54% to total MSFL Revenue in Q3FY21 vs. 50% in Q3FY20 and 52% in Q2FY21.
§ Strong revenue & profitability in Q3FY21 is on account of better product mix, stable demand and cost optimization efforts undertaken by the company.
§ One of the two metallizer lines under capex is expected to come online during Q4FY21 and will further enhance capabilities to improve output of value-added specialty films and better MSFL’s profitability going ahead.
§ Average cost of debt for MSFL has reduced by 220 bps to 7.6% in Dec-20 from 9.8% in Mar-20.
About Max Ventures & Industries Limited (MaxVIL):
MaxVIL
Max Ventures & Industries Limited (MaxVIL), a part of the leading Indian multi-business conglomerate Max Group, owns and operates a real estate business through its 100% subsidiary, Max Estates, and a packaging films business through Max Speciality Films, a 51:49 strategic partnership with Toppan, Japan. MaxVIL also has a real estate services & management company – Max Asset Services and an investment subsidiary, Max I., which supports real estate entrepreneurial ventures. MaxVIL is listed on NSE and BSE.
Max Estates Limited
Established in 2016, Max Estates Limited is the real estate arm of the Max Group and a wholly owned subsidiary of MaxVIL. Its vision is to bring the Group’s values of Excellence, Credibility and Sevabhav to the Indian real estate sector. Its marquee projects include a one-of-its-kind commercial office space Max Towers, on the edge of South Delhi that opened its doors in 2019 and 222 Rajpur, a luxury residential villa community on Rajpur Road, Dehradun. It aims to create, build and operate Grade A+ office spaces in Delhi-NCR. The company recently entered in a JV for with New York Life Insurance Company (NYL) for its3rd commercial project in Delhi-NCR.
Max Speciality Films Limited
Max Speciality Films, a subsidiary of MaxVIL, is an innovation leader in the Speciality Packaging Films business. It has a strategic partnership with Japan’s Toppan Printing Co. Ltd., a leading global printing company. Max Speciality Films is among the leading manufacturers of Biaxially Oriented Polypropylene (BOPP) films including specialty packaging, labels, coating and thermal lamination films for the India and overseas markets, with a total capacity of 80.50 Kilo Tonnes Per Annum (KTPA).
Max I. Limited
Max I. focuses on synergistic investment opportunities with real estate businesses through “Maxcelerate”, an ecosystem for real estate technology start-ups. The key objective of Max I. is to find and nurture companies synergistic to the real estate business of the Max group through deeper and patient engagement.
Max Asset Services Limited (MAS)
MAS focuses on providing services such as building operations management, as well as managed offices for enterprises. MAS leverages various technological tools such as mobile app, video analytics, visitor management etc. which help in managing costs while delivering superior customer experience
Safe Harbor statement:
Statements in this document relating to future status, events, or circumstances, including but not limited to statements about plans and objectives, the progress and results of research and development, potential project characteristics, project potential and target dates for project related issues are forward-looking statements based on estimates and the anticipated effects of future events on current and developing circumstances. Such statements are subject to numerous risks and uncertainties and are not necessarily predictive of future results. Actual results may differ materially from those anticipated in the forward-looking statements. The company assumes no obligation to update forward-looking statements to reflect actual results changed assumptions or other factors.
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