MaxVIL Back to Profits in FY20; Reports PAT of Rs. 441 Mn Versus Loss of Rs. 293 Mn in FY19

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 audited financial results for the quarter and full year ended 31st March 2020 today.

- Consolidated Revenues for FY20 at Rs.13,822 Mn, up by 50 % year on year
- Consolidated EBITDA for FY20 at Rs. 1,667 Mn, up by 784 % year on year
- Consolidated PAT for FY20 at Rs. 441 Mn, versus Loss of Rs. 293 Mn in FY19
- Both Max Towers and Max House (phase 1), which is nearing completion, had strong leasing pipeline; closed transaction with a marquee tenant during COVID-19 and enquiries have restarted as nation is exiting lockdown

In FY20, MaxVIL achieved Revenue Growth of 50% with EBITDA of Rs. 1,667 Mn and PAT of Rs. 441 Mn aided by strong and sustained performance across both businesses. In Q4FY20, revenue stood at Rs. 2,531 Mn, up by 1 % YoY while EBITDA was at Rs. 357 Mn. vs Rs. 96 Mn in Q4FY19, led by healthy leasing momentum in its flagship commercial project and a healthy contribution margin in its packaging business. Profit after Tax for Q4FY20 was recorded at Rs. 34 Mn. compared to a loss of Rs. 56 Mn in the same quarter last year.

Commercial Real Estate

The Global Pandemic is expected to lead to short term demand disruption, but the supply side is expected to face an equally severe crunch. With a shortage of Grade A+ office spaces which offer safety, security, continuity of operations and healthy working environment, we are confident of a faster recovery especially for focused players like us. Cost optimization drive from Corporates will lead to migration of tenants from expensive, old and strata sold assets in locations to developer owned and managed Grade A+ assets within NCR. We also anticipate that large occupiers in business hubs such as Gurugram will diversify their real estate footprint to transition to a hub and spoke workplace model for superior business continuity. We believe that this will further aid the demand for Max Estates office assets in Okhla and Noida. The crisis will lead to further consolidation in the Real Estate industry and enable Max Estates to emerge as the preferred workspaces brand in the NCR region.

The company has introduced curated innovative office space solutions recognizing the needs of office occupiers to re-locate while conserving cash to increase focus on health and safety of their employees. With these measures in place, the company is confident of attracting corporates with expansion needs as well as occupiers of legacy workplaces in Delhi's central business district who may have challenges of implementing comprehensive hygiene, health and safety protocols due to limitations presented by older office buildings.

Earlier in FY20, MaxVIL made significant progress in its core business of Real Estate. The company launched its first Commercial project, Max Towers in Noida in April 2019 and has been successful in leasing more than 50% of the space to marquee tenants. Max Estates' second commercial project, Phase 1 of Max House at Okhla is in final stages of completion and is expected to launch in Q2FY21. Max Estates has begun implementing its strategy of capital light approach in Real Estate with the investment by New York Life (NYL) in its third Project named Max Square in Sector 129 on Noida Expressway. MaxVIL was also successful in laying strong foundation for its asset services company - Max Asset Services Limited (MAS), which continues to add new clients and leverage its knowledge base in providing services such as building operations management, as well as managed office space to customers.

While Max Estates was able to significantly scale up the real estate portfolio, its focus on Balance Sheet continues to take priority. Gross Debt in real estate business is Rs. 1,010 Mn and with overall cash of Rs. 1,056 Mn, it is Net Debt Zero. With sufficient financial resources and a strong balance sheet, the company is confident of completing its current projects and more importantly acquiring distressed assets to deliver a world class experience.

MaxVIL's packaging films business, Max Speciality Films Limited (MSFL) has turned around in FY20. With revenue growth of 11% YoY to Rs. 9,660 Mn along with EBIT of Rs. 826 Mn, MSFL is confident of a sustainable growth momentum for the next few quarters benefiting from low raw material prices and improved uptick in demand.

Commenting on the performance, Sahil Vachani, MD & CEO of MaxVIL said, "FY 20 has been an instrumental year that has set the platform for Max Estates to emerge as the most preferred brand and be counted among the leaders in Commercial Real Estate in NCR. The company has effectively demonstrated capabilities around project execution, leasing, asset management, prudent capital management and distressed asset acquisition over the past year.

MaxVIL over the past year has also cemented its foothold in the speciality packaging Industry with leading Innovations across recyclability solutions for the Indian and Global market.

The team has achieved the above strategic objectives while ensuring robust growth in profitability which is sustainable.

COVID-19 is expected to impact business environment and momentum in the short term, however, on the back of strong fundamentals of the Indian Economy and Delhi-NCR commercial real estate market, we are confident about doing well in quarters to come. Our strategy to focus on marquee tenants for our commercial projects has worked well. We have witnessed over 90% on time and full payment of dues from tenants for March and April 2020. Our strong value proposition has led to us signing a new tenant for Max Towers even during the lockdown."

Our objectives for FY21 will be to fully lease Max Towers and Phase 1 of Max House, Okhla. We will also start construction on Phase 2 of Max House, Okhla and Max Square, Noida. Despite some lockdown forced delays currently, we will aim to complete these projects as per original schedule of FY 22 and FY 23 respectively. We will continue our Asset Light approach while evaluating and pursuing distressed of commercial projects opportunities in Delhi NCR.

MSFL continues to deliver an improved performance with higher share of value-added specialty films. With favourable raw material prices, stable industry wide capacity and strong uptick in demand from FMCG companies, the company is confident of sustainable performance in the quarters to come. Backed by strong R&D skills, product innovation capabilities, MSFL is strengthening its business model and 'Go to Market' proposition.

Shares of Max Ventures and Industries Ltd was last trading in BSE at Rs.32.65 as compared to the previous close of Rs. 31.85. The total number of shares traded during the day was 8758 in over 115 trades.

The stock hit an intraday high of Rs. 34.45 and intraday low of 31.9. The net turnover during the day was Rs. 291032.

Source : Equity Bulls

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