Max Ventures and Industries: Post-Demerger Sum-of-the-Parts Bargains

Naveen Chandramohan of Itus Capital presented his in-depth investment thesis on Max Ventures and Industries (NSE: MAXVIL) at Asian Investing Summit 2018.

Thesis summary:

Max Ventures and Industries was created from a three-way demerger of the parent company Max India, founded by Analjit Singh in 1982. The company was set up to house the operating entity, Max Speciality Films (MSF), which has been in business since 1990, producing biaxially oriented polypropylene (BOPP) films for the packaging and storage industries. Max Ventures’ subsidiary, Max Estates, has ventured into real estate development and private, unlisted investments.

At the recent market cap of 500 crores, an investor gets (i) a packaging company (of which Max Ventures owns 51%, having sold 49% to Toppan Printing for 200 crores), which has expanded capacity to support an increase in revenue by 50% over the next three years; (ii) a real estate business that owning 650 crores in assets, which are being developed; and (iii) 80 crores in private equity investments in two businesses, which are growing revenue by ~30% but are not yet profitable. The optionality embedded in the recent market valuation of Max Ventures provides for upside potential of 3x, with protection on the downside. The most significant risk is management execution.

Read Naveen’s related article on value investing in India.

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About the instructor:

Naveen Chandramohan started Itus Capital – an asset management firm running a concentrated fund investing in Indian equities. Currently the fund manages the founders wealth alongside a pool of external capital, who are primarily business owners and family offices. Prior to this Naveen was a Responsible officer and Portfolio manager, based out of Hong Kong for a hedge fund based out of the US. Over a 8 year period, the India portfolio has returned a gross return of 32% IRR.