Max Estates Limited (MAXESTATES) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q1 FY '27 Earnings Conference Call of Max Estates Limited hosted by Ambit Capital Private Limited. [Operator Instructions] Please note that this conference is being recorded. I would now hand the conference over to Mr. Karan Khanna from AMBIT Capital Private Limited. Thank you, and over to you, sir.

Thank you, Muskan, and good morning, everyone. On behalf of AMBIT Capital, I would like to welcome you all to the 1Q FY '27 Earnings Conference Call for Max Estates Limited. From the management today, we have with us Mr. Sahil Vachani, Vice Chairman and Managing Director; Mr. Vachan Singh, Chief Operating Officer; Mr. Nitin Kansal, Chief Financial Officer; and Mr. Archit Goyal, Head of Investor Relations. We would like to now begin the call with opening remarks from the management, post which we will have the forum open for an interactive question-and-answer session. Thank you, and over to you, Sahil.

Thank you, Karan, and good morning, everyone. I'd like to begin with some industry highlights, followed by key business updates for the quarter ended 30th of June 2026. The Delhi NCR residential market to cover that first, broadly -- saw a broadly resilient quarter despite a more cautious demand backdrop nationally. Delhi NCR recorded close to 8,800 residential unit launches in Q2 2026, with Gurgaon continuing to lead the region accounting for approximately a 70% share across their key vectors of Sohna Road and Dwarka Expressway. Noida, Greater Noida too contributed the balance with Noida Expressway and Noida Extension emerging as key micro markets. For the first half of calendar year 2026, the total launches across the region reached approximately 18,500 units, reflecting sustained momentum. On the pricing side, weighted average prices held broadly stable on a quarter-on-quarter basis, while capital values recorded healthy annual growth across 4 cities, and rentals improved steadily, led by primary -- the prime micro markets that I outlined. That said, the residential sales volumes across the sector moderated through the quarter against a backdrop of global uncertainty, tightening liquidity conditions and cautious consumer sentiment. On the commercial side, Delhi NCR recorded strong office leasing of 4.1 million square feet in Q2 2026, reflecting healthy occupier demand across key commercial markets led by GCCs, IP, flexible workspaces and professional service firms. Coming to the business performance for Max Estates. First, on the residential side, we are very delighted to share that Max Estates delivered a strong Q1 FY '27 with presales of approximately INR 1,100 crores, registering a 5x year-on-year growth, a clear reflection of the continued strength of our brand and product positioning even in a more selective demand environment. This was anchored by the full sellout of Phase 1 of the Terraces at Estate 361 Gurgaon, which contributed approximately INR 500 crores, while sustenance sales across the existing portfolio added another INR 600 crores. Collections for the quarter stood at approximately INR 575 crores, consistent with our historical collection range of 20% to 25% of the sales value, enabling us to fund construction without incremental debt on any of our residential projects. On the embedded value, the total revenue potential across our launched residential and mixed-use portfolio stands at INR 17,500 crores. Of this INR 13,500 crores is already sold and contracted, comprising INR 3,500 crores already collected and a further INR 10,000 crores to be collected as construction progresses. It's important to note that our current P&L reflects only a fraction of what is already contracted. Translating the sold portfolio into profitability terms, the embedded PBT is estimated in the range of INR 4,500 crores to INR 5,500 crores. This is a critical distinction of how we think about the business. A substantial majority of our future reported earnings is already locked in, well ahead of P&L recognition, which meaningfully derisks our earnings trajectory. Looking ahead, our residential launch pipeline spanning both unsold launched inventory and future launches stands at approximately INR 16,100 crores. Of this, INR 4,000 crores is already launched and available for sale this year, while the remaining INR 12,000 crores approximately represents new project launches planned through the course of FY '27 as we continue to target annual addition of 2 million square feet of residential development. Max Estates launched the Terraces in May, its newest residential offering within Estate 361 in Dwarka Expressway Gurgaon. The Terraces brought together smart residences, 8 community shared spaces across a host of amenities. This particular aspect within the development has a broad GDV of INR 1,200 crores, which has -- and as part of Estate 361, which has an overall GDV of INR 9,000 crores. Phase 1 with a GDV of INR 500 crores was fully sold out in the launch quarter. Estate 361 is built as a fully intergenerational community, encompassing the Terraces for young couples and first-time homeowners. At Estate 105 Noida, driven by the strong response to the project, we have revised the development mix to a residential portfolio, enhancing our project GDV to INR 6,000 crores with Phase 2 of this planned in FY '27 as a launch. Max One, which was part of the transformative revival of the long stalled Delhi One project has now got well underway. The acquisition and subsequent clearances provided a decade worth of relief to erstwhile homebuyers who are brought into the Max Estates family. Including bookings recognized post RERA approval from the erstwhile developer, the project spans 2.5 million square feet with a total GDV of approximately INR 3,200 crores and an annuity income of INR 145 crores. Delighted to share that the project has achieved the highest sale value in Noida with sales price of INR 37,000 per square foot, excluding GST. Coming to our new launch in Gurgaon, Sector 59 on Golf Course Extension Road, it has a development potential of 1.3 million square feet with a GDV potential of more than INR 3,500 crores, and we are expected to launch in Q3 of FY '27. Overall, like I mentioned, the company has a residential pipeline of INR 16,000 crores and continues to target an annual addition of 2 million on residential development. Coming to the commercial portfolio, on the commercial side, all 3 of our operating assets, Max Towers, Max House and Max Square continue to operate at 100% occupancy, which remains perhaps the single most important data point for our commercial business. It validates both the quality of our product and the strength of tenant demand in the micro markets where we operate. Max Towers continues to command a significant re-leasing premium. The latest lease signed at INR 156 per square foot per month against the current weighted average rental of INR 132, a mark-to-market upside of over 50% and a premium of more than 50% to immediate micro market rentals. In addition, the project, both Max Towers and Max Square have received a 5-star rating from British Safety Council in its first ever occupational health and safety audit, evaluating over 50 best practice elements. Coming to the construction pipeline, Max Square 2, having a leasable area of 1 million square feet is on track and is expected to receive occupancy certificate by Q2 FY '28. It is expected to add INR 125 crores to the annuity portfolio, strong leasing momentum highlighted by the signing of an LOI for a long-term pre-lease of approximately 90,000 square feet at 25% premium to the prevailing micro market. Coming to Max District, which is in Gurgaon and also under construction. It has a leasable area of 1.6 million, is on track, also expected to receive occupancy across Q3 in FY '28 and Q3 of FY '29, respectively. We expect it to add INR 200 crores to the annuity portfolio. And again, here, strong leasing momentum highlighted by the signing of an LOI for a long-term pre-lease of 200,000 square feet at 35% premium to the micro market rental. As our under construction pipeline progresses, we expect to achieve our annual rental income of approximately INR 700 crores at peak occupancy. We will also continue to target 1 million square feet of new business development towards this portfolio moving forward. Overall, we enter Q2 of FY '27 with a very strong conviction in our execution capability and pipeline visibility. And I now hand over the call to my colleague, Nitin, who's our CFO, to take you through. Thank you.

Thank you, Sahil. Good morning, everyone, and thank you for joining the call. I'll begin with an important update with regard to the credit rating of Max Estates. Last week, ICRA, one of the premium rating agencies in the country, assigned Max Estates a first-time issuer rating of A+ with a stable outlook on a consolidated basis covering the company and its 14 subsidiaries. In arriving at this rating, ICRA assessed and committed receivables of close to INR 9,500 crores as of March '26 and a cash flow adequacy ratio of about 105%, meaning our contracted receivables cover pending construction cost and residential debt. This is the first external credit assessment that the company has had, and we think it is useful independent read on the points Sahil has described earlier. Now let me take you through the operational and financial highlights for the quarter 1 FY '27. The consol revenue stood at INR 52 crores in quarter 1, while consol EBITDA stood at INR 8 crores. Consol profit before tax stood at INR 11 crores and PAT stood at INR 8 crores. All the commercial assets were 100% leased and the total area stood at 1.2 million square feet with the lease rental income from Max Towers, Max House and Max Square up 5% year-on-year to INR 40 crores in quarter 1. Max Asset Services bank revenue stood at INR 15 crores in the quarter 1, a growth of 16% on a year-on-year basis. As on June '26, the net debt stood at INR 234 crores with a gross debt of INR 1,960 crores, including lease rental discounting borrowings of INR 934 crores, while cash and cash equivalents stood at INR 1,727 crores, that means a net debt of INR 234 crores. Overall, we believe Max Estates remains well positioned with a strong launch pipeline, healthy collection and growing annuity visibility across both our residential and commercial businesses. With this, now I would now request Karan to open the floor for the question-and-answer session. Thank you.

[Operator Instructions] First question is from the line of [ Parth Sodra ] from Trinetra Asset Managers.

So my first question is on employee and marketing expense, like it has increased materially Y-o-Y in Q1. How should we think about the quarterly cost run rate and EBITDA margins over the rest of 2027?

This is Nitin Kansal. I'd like to answer your question. See, I think the underlying aspect of the advertising and marketing cost lies in the accounting principle. The way the accounting principles are defined under Ind AS 115 pertains that in the case of residential sales, the entire sales is accounted for in the P&L at the time of transferring the position to the customer, whereby -- although the advertising and marketing costs are all charged to P&L. If you see in the current quarter, we had launches and ongoing sales and marketing effort going in the current quarter as compared to the same quarter in the previous year, in which we didn't had any lease. So the current year quarter looks like -- gives an impression of being elevated as compared to on a year-on-year basis. Going forward, the sales and marketing expenses would be in line with the launches which we have planned during the course of the year.

Okay. Got it. And my second question is like with INR 11,900 crores of residential GDV planned across Estate 361 Phase 2, Estate 105 Phase 2 and Sector 59, which of these projects do you see as the biggest contributor to FY '27 presales?

So all -- we would not like to single out a single project. All these 3 projects could distributably give a contribution. And the important factor to note is that all these projects are -- these projects are in different micro markets, while Estate 361 happens to be on the Dwarka Expressway, Sector 59 happens in the case -- in the upcoming Golf Course Extension Road, and we have Estate 105, which is in Noida. So it's widely distributed and would be very much equally distributed across these 3 projects.

[Operator Instructions] The next question is from the line of Aman from GoPaisa.

I wanted to check how exactly the relation is between Max India and Max Estates, particularly with respect to Antara. I noticed from Max India's presentation that we are hosting some of the Antara projects in Estate 361. So how exactly does it work? How does it work commercially? And commercially, what kind of revenue share or shares do we have with this? And also the monetization of these Antara projects.

Sure, sure. Thank you, Aman, for asking this question. Aman, just a quick clarity, Max India and Max Estates. Max India being the holding company of Antara are 2 distinct listed entities having separate managements altogether. At this point of time, the estate projects, Estate 361 and 361 are completely housed on the balance sheet of Max Estates. And all the development which is happening in these projects, although are being marketed under the brand name of Antara, the entire profit and loss cost, all benefits and expenses are on the balance sheet of Max Estates. As we speak today, Antara acts as a knowledge partner to Max Estates for which they are given a fee, which is a fixed fee in the range of close to 9.5%, which is the development manager fees given to them. And this -- what Antara helps us is it propels and gives us the community, a flavor of an intergenerational community, which gives us multipronged avenues to sell our product, whereby if you see in the last quarter, we launched Terraces. We have got Max Estates luxury residences. We have got a senior living residences under the brand name Antara, and then we have got the Terraces. So all these things make a complete package in our projects in Estate 360 and 361. So our relation, just to summarize, our relationship with Antara is purely on an arm's length basis, and they get a 9.5% fee on the top line to run -- to as a development manager for Max Estates.

Just give me a guidance on this one. 9.5% of what exactly -- of what...

Top line, what has happened? Just to clarify, in the case of Estate 360, 1/3 of the project was being marketed and developed under the brand name Antara. So on the 1/3 portion, which is close to what ballpark in the range of INR 1,200 crores to INR 1,500 crores of Estate 360, which was under the pages of Antara, only on that, they get 9.5% and not on the entire project.

Since it becomes -- so technically, it becomes the Antara project, which we are developing. So is this strategy -- do they help us get extra in terms of extra per square feet? Or how does it help to have Antara? I understand it's a holding company. But how exactly do we use Antara?

So what happens is, I think I'd like to defer on this. It does not become an Antara project. It remains a Max Estates project. And what happens because of the expertise, which is coming on the table for the senior living component through Antara, Antara is able to drive better price realizations on the assets which -- and thereby making it self-funded. So the way to look at is we without having a cost escalation, in fact, better economics, we are able to get a better sales velocity on the Section, which is unsold under the brand name of Antara. In the Estate 360, we had a continuous basis. We had a price escalation or price differentiation of Antara as compared to luxury residences in the range of 7% to 10%. What it means that whatever fee which we were paying to them was getting realized and they were able to realize the pricing, which was in premium to Max Estates residences.

So you're saying 18% of extra revenue we make and that is in itself pass-through to them?

It's not 18%. I think I'll again repeat. The revenue is fully to the account of Max Estates. On the top line, if we sell an apartment of INR 5 crores, the top line accrues to Max Estates. And if it's a senior living apartment, they get INR 45 lakh, INR 48 lakhs as a fee, and that is also paid as we collect over the life cycle of the project and not upfront.

Mr. Aman, I request you to join the queue for the follow-up question. [Operator Instructions] The next question is from the line of Karan Khanna from AMBIT Capital.

Firstly, a question at a broader macro and the industry level. We've seen a lot of new grade developers taking a chance in the Gurgaon and Delhi NCR market at large with premium projects which have been launched lately. While obviously, this shows that demand has been quite resilient, how should one read the success of one of your peers' project in Mumbai -- from Mumbai and at Gulf Coast Extension Road? And what does this do to your project in Sector 59? And more importantly, with increased competition, how should one think about BD potential given that there will be higher demand from the landowners and the overall scope for absorption of inventory given that many new projects have similar ticket sizes?

Thank you for that, Karan. So we do continue to believe that there is a wave of consolidation that is happening in the real estate space and that consolidation towards organized, trusted listed players will continue, and we are seeing a trend of that. In specific, we remain very encouraged by the response some of our peers have received in the Gurgaon market. It is reflective of the inherent demand for a good quality offering and product and a brand. And as Max Estates, we believe that we firmly operate in that category where from a product differentiation perspective, from a brand recognition perspective, we do believe that we will be able to command very strong sales. And our track record has shown that to us like the fact that we have closed INR 5,300 crores plus sales in the last 2 financial years and even in Q1 having done INR 1,100 crores of sales as we speak. On the business development part, I think we remain very confident and optimistic that there will be -- while there will continue to be a consolidation amongst the listed and organized players, Max Estates continues to be one of them, and we'll continue to do the BD in the -- within our guidelines and within our parameters, and we continue to do that as we move forward. So we remain very optimistic about that as well.

Sure. And then second question, sir, is on the BD pipeline. You had earlier said that Ghaziabad, Jewar and Faridabad were markets you were studying, but your core focus remains Gurgaon, Delhi and Noida. With Ghaziabad now appearing more prominently in the BD conversation as well as on Slide 29 of your investor presentation, has Max Estates moved beyond evaluating markets to actively pursue specific parcels? And if so, could you give us some sense on the potential scale deal structure and return hurdles that you're seeing in Ghaziabad versus the traditional Gurgaon and Noida market?

Yes. So we at Max Estates will continue to evaluate many, many opportunities and within the greater NCR region as well, and we are already doing that as is evident and as we've shown. It's a little premature at this stage to give guidelines or to give guidance on what the commercial parameters of a deal that we have not yet closed are. But I think broadly, just to give you a perspective, NCR and the larger part of NCR, we remain very confident to continue to accelerate our growth journey.

Sure. And then lastly, Nitin, in the last call, you had indicated INR 2,500 crores to INR 3,000 crores of FY '27 collections against INR 1,578 crores last year. with project deployment of around INR 1,500 crores to INR 1,800 crores. Given Q1 collections were around INR 500 crores, are you still comfortable with the INR 2,500 crores, INR 3,000 crores full year range? And importantly, should we expect OCF to remain meaningfully positive even as construction spend accelerates at Estate 105, Max and Estate 361?

Absolutely, Karan. In fact, the quarter 1 collection has, in fact, given us more confidence that we are on track to achieve our target collections in OCF for the current year, and we expect our collections to be in the range of INR 2,500 crores to INR 2,700 crores in the current year, which would be a combination of the projects which we've already sold, which will be hitting the construction milestones and the fresh sales, which we are planning to do, which is in equal proportion to one of them. And we would be deploying -- see, if I can break up my deployment would be on 2 prongs. One would be on the -- we would be deploying close to INR 1,500 crores to INR 1,800 crores on the project, and we would be having OCF of close to INR1,000 crores left should be planning to deploy on the BD effort ongoing in the company.

The next question is from the line of Pritesh Sheth from Axis Capital.

Just 2, 3 questions. Firstly, if I see the velocity that we have achieved in projects which you have launched in361 Max and Estate 105, we can see like 50% to 70% of the [indiscernible]

Pritesh, your line is not clear.

Okay. So I was just checking on the -- one should have now given that we have sold 50% to 70% of the inventory in first 6 months, how should we think about velocity -- like should we -- going forward also assume that whenever a project is launched within 6 months, there is enough demand where we achieve this kind of velocity and within 1 year or 2 years, we should be able to sell out this project. And apart from that, for Max One, while it's on the ultra-luxury side, there, how [indiscernible] or it can go, the sale can go [indiscernible] the project.

Yes. So just to give you an overview, we are not giving forward-looking guidance in terms of sales. But as you have seen our track record, we remain extremely optimistic and confident in achieving very robust sales. You've seen that you mentioned the numbers that we have done. I would like to highlight that even in this quarter, almost 50% of our sales came from sustenance sales and 50% came from a new launch approximately. So we remain very confident on the strength of the product, on the strength of the brand, on the pull that we have on our geographical diversification and on our product diversification to continue the growth trajectory for Max Estates at large.

But from guiding for FY '27 or [indiscernible].

Mr. Pritesh, we can't hear you. Your line is not clear properly.

Okay. Is it better now? Or should I come back?

It's better.

Yes. Okay. Just as a follow-up, you still want to giving guidance for FY '27 or now that we have seen first full quarter and half of second quarter as well, you are more confident on guiding for FY '27?

Yes. So like I said, we are not giving a guidance for FY '27. All we are saying is we do have about INR 16,000 crores of inventory available with us to sell and for the coming year and beyond. So we remain very confident, optimistic that what we have is in fantastic location. It's a great product mix. It's a great product diversification basis our strategy. So we remain very confident on that.

Sure, sure. And just one last, in terms of launches, you highlighted Q3, we will have a Sector 59 launch. But apart from that, the balance inventory in 361 and Estate 105, how should one think about phasing that out?

Yes. So some of it will obviously go to FY '28, and we'll plan it in that -- like I said, of the INR 16,000 crores, there will be some which will come in Q3, and there will be some that will come in FY '28 as well.

[indiscernible]

It will be more in FY '28 and less in FY '27.

Like I said, we will decide that basis the market scenario and macroeconomic environment.

Sure, sure. Okay. Just one last on the Delhi [indiscernible] how should one think about the time?

This has been one of the most important milestones in this development, whereby the hurdles have finally got cleared. And now with the DDA finally agreeing to this, the new guidelines that have come has cleared the path for land pooling to finally take off. And we, as Max Estates continue to be extremely excited and optimistic, and we believe that this is a complete transformational policy for the state of Delhi for development in Delhi and for housing in Delhi. So it's completely a very, very transformative broad policy and contours of the deal, which is in line with what has been the discussions that DDA has had over the past many years. So we are very happy that finally, this has come through.

And in terms of time lines of getting extend to the listed entity, [indiscernible]

Yes. It's difficult to mention time lines. As you know, that this has just happened a few days ago. So we are still trying to get more details of it. We understand that there is still some notification that Ministry of Housing has to do. So -- and then we have to understand in more detail some of the aspects. But yes, it is something that we will look at as Max takes very, very seriously.

The next question is from the line of Parikshit Gupta from Fair Value Capital.

Congratulations on a good quarter. My first question is in continuation from one of the other participants on business developments. In the previous quarter's con call, we also articulated the fact that the discussions with landowners were opportunistic given the volatility in pricing. Can you please help us understand the current scenario? I mean, how the discussions are going? Is the pricing more favorable or anything on that, please?

I think we continue to remain very optimistic and push on the business development pipeline. As you -- as I discussed, we have identified our key geographies, and we continue to drive them. At this stage, I would not like to comment any more on how some of those discussions are going, obviously, because of the competitive nature of each of those opportunities. But it's suffice to suggest that we are very optimistic, and we are continuing to push the business development pipeline.

Okay. My second question is just a bookkeeping question. So when you mentioned that 1 million square feet of commercial real estate will be added each year, does that -- is that inclusive of the INR 700 crores annuity guidance? Or is it on top of that?

This is Nitin. Just to answer that, INR 700 crores is on account of the projects which we have already done and under construction and development at this point of time. As we -- so INR 1 million is over and above what the INR 700 crores is.