Max Estates’ shares jump 7% to new high, soar 27% in 2 sessions; here’s why

Shares of Max Estates jumped over 7 percent in intra-day deals today, May 3 to hit a new high of ₹373.90 on NSE. This comes following an 18.4 percent surge in the previous session. In these 2 sessions, the stock has rallied over 27 percent.

Max Estates has seen a rise in its stock price following significant deal wins. The company, through its subsidiary Max Estates Gurgaon Two, secured an agreement for a residential development project in Gurugram with a gross development value of over ₹9,000 crore. This development will span 18.23 acres of land and include a 4 million square feet area for residential properties. This notable deal strengthens Max Estates' position in the real estate market and is likely contributing to its recent stock price upswing.

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"Post closure of this transaction, the portfolio of Max Estates will grow by 50 percent from 8 to 12 million square feet of development potential, which is very well diversified in terms of asset classes (commercial office and residential), geographic footprint (Noida, Delhi and Gurugram) and risk spectrum (delivered and under construction)," said Rishi Raj, COO of Max Estates.

The stock has risen 20.5 percent in 2024 so far. The over 27 percent rally in the 2 sessions of May comes after a 6.6 percent and 2.3 percent rise in April and March. Meanwhile, it fell 7.5 percent in February and 5.9 percent in January this year.

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Earlier this week, the firm also announced a strategic investment of ₹388 crore from New York Life Insurance Company. According to the company's exchange filing, these funds will be allocated toward expansion in the high-growth residential market, driving the company's residential development initiatives. This investment provides Max Estates with additional resources to capitalize on growth opportunities in the residential sector.

Max Estates stated that the strategic investment will help it achieve its targeted growth trajectory by acquiring at least 2 million square feet of development opportunities annually. New York Life, which owns 22.67 percent of the publicly listed Max Estates, also has a 4 percent stake in the company's new commercial projects in the Delhi-NCR region, including the operational Max Square on the Noida Expressway.

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According to brokerage firm Ambit, the investment in Max Estates is a positive development as it will provide the company with growth capital to invest in the fast-expanding residential market. Additionally, it highlights Max Estates' capability to monetize rent-yielding assets to fund future growth. Ambit emphasized that the investment's implied cap rate of 7 percent makes it value-accretive for the company, reaffirming its buy recommendation on the stock with a two-year price target of ₹395.

Max Estates had listed at ₹298 on the NSE on October 30, 2023, after its reverse merger with Max Ventures and Industries. The stock has gained over 25 percent from its listing price till now.

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“We endeavour to scale the portfolio beyond 8 million square feet by adding at least 1 million square feet per year on an average to each of the residential and commercial asset classes while maintaining our distinctive source of differentiation, which is ‘design and hospitality led consumer experience,” Sahil Vachani, MD and CEO of Max Estates, has said on MEL listing.

Max Estates, established in 2016, develops residential and commercial use properties. The company’s projects include commercial office space Max Towers, Max House, a re-development of the office campus and 222 Rajpur, a luxury residential villa community on Rajpur Road, Dehradun.

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