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Explained: Why Max Estates shares surged 15%, the most since its listing
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
Shares of Max Estates had made their stock market debut in October 2023.
Shares of Max Estates Ltd. surged as much as 15% on Thursday after it announced a strategic investment of ₹388 crore from the New York Life Insurance Company. The proceeds will be used for expanding in the high growth residential market for fueling residential growth, the company said in a filing on the exchanges.
The strategic investment will further enable Max Estates to deliver on its aspired growth trajectory of acquiring at least 2 million square feet of development opportunity every year, the company said.
New York Life owns 22.67% in the the listed entity Max Estates. It also owns 49% stake in Max Estates’ new commercial projects in Delhi-NCR, which includes Max Square, which is already operational on the Noida Expressway.
Brokerage firm Ambit said that this is a positive as it will give Max Estates access to growth capital for investing in the high-growth residential business. It also indicates the company’s ability to monetise rent-yielding assets to fund growth.
At an implied cap-rate of 7%, this infusion is value-accretive for Max Estates, according to Ambit, who maintained its buy recommendation on the stock with a two-year price target of ₹395.
Shares of Max Estates had listed on the bourses in October last year after its reverse merger with Max Ventures and Industries Ltd. The stock is trading 14.9% higher at ₹337.95. With today’s surge, the stock has also turned positive for 2024.
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