Nitin Kansal, Chief Financial Officer of Max Estates believes the residential market is increasingly being driven by genuine homebuyers, with customers placing greater emphasis on quality, community living and trust.
The company remains optimistic about the company’s growth prospects despite choosing not to provide a formal guidance for FY27. With geopolitical uncertainties and an evolving macroeconomic backdrop, Max Estates is focusing on long-term value creation rather than chasing near-term targets.
Pre-leasing activity at upcoming projects in Gurugram and Noida has been encouraging, and the company expects rental income to grow steadily over the next few years, supported by healthy demand for premium office space.
This is the edited excerpt of the interview.Q: Earlier you had indicated that there was a delay in sales due to the West Asia war, and hence you did not meet the guidance. For FY27, you have not given a guidance this time around. Is this because of a cautious approach, or are supply-side constraints related to the West Asia conflict still continuing?
A: Yes, as I mentioned earlier, there were concerns regarding the West Asia crisis, but we were still able to achieve significant numbers and clock sales of close to ₹1,800 crore from a project in Noida that was launched in the last week of March.
In the current evolving macro scenario, we believe it is important not to provide guidance at this point. Giving guidance tends to push us towards taking short-term views rather than focusing on long-term value creation. Instead, we are guiding investors on our portfolio of around ₹17,200 crore, which we plan to monetise over the next three years, and we intend to stay committed to that.
Q: How much of that do you expect to realise in FY27? Would it be 50% or 60%? What indications are you getting from the demand environment, especially in the NCR region?
A: The Delhi-NCR market is gradually shifting from being a speculative market to one that is more end-user driven, where customers are focused on value-driven ecosystems, communities and trust. We remain very bullish about achieving significant growth.
Currently, we have around ₹3,800 crore worth of inventory that has already been launched and is in the process of being sold. Another ₹13,000 crore worth of projects is expected to be launched during the current year. While we are not giving any explicit guidance, we remain hopeful of delivering good growth.
Q: Are there any supply constraints that could affect that growth? Are you seeing any pressure from higher raw material costs compared with previous levels?
A: Most of our raw material supplies come from the domestic market, and only a small portion is sourced overseas. Therefore, logistical issues do not have a major impact on us.
All our ongoing projects, covering nearly 17 million square feet, are progressing on schedule and within budget.
Q: You had earlier indicated construction costs of around ₹5,200 per square foot. Have costs increased further, and what would that mean for pricing?
A: We have a robust budgeting process with adequate contingency measures built in, ensuring that any increase in costs does not materially affect margins.
At this stage, we do not expect costs to rise significantly, assuming the current situation stabilises sooner rather than later. However, if the crisis persists for a longer period, we will reassess the situation.
Q: Your net debt stands at around ₹174 crore. Do you plan to raise more debt to fund the upcoming pipeline?
A: Currently, we have debt of around ₹1,800 crore against cash holdings of nearly ₹1,750 crore. Most of this debt consists of lease rental discounting and construction finance, which are long-tenure and secured in nature.
As of today, we have around ₹600-700 crore of dry capital available for fresh acquisitions.
Q: Earlier, you had said that decision-making by buyers had slowed. Where are we in the residential cycle, particularly in the NCR market?
A: As we mentioned earlier, the sales cycle has lengthened. However, that has worked in our favour because customers are spending more time at our experience centres with the sales team.
This allows them to appreciate the difference between investor-driven projects and customer-centric developments. Although the sales cycle has increased, the quality of sales has improved and customer appreciation for well-designed projects has gone up significantly.
Q: Tell us about the commercial segment. What kind of growth are you targeting in FY27, and what does the pipeline look like?
A: We reported rental income of around ₹154 crore and have guided for rental income of nearly ₹700 crore by FY29-30.
What is encouraging is that two of our under-construction assets are already witnessing strong pre-leasing activity. In Gurugram, around 2 lakh square feet has been pre-leased, while in Noida, another 1.75 lakh square feet has been pre-leased.
The important point is that these projects are still one-and-a-half to two years away from completion, yet we are seeing strong traction from occupiers looking to lock in space. Beyond the leases already signed, we are in active discussions for more than 2 million square feet across these assets. Demand on the commercial leasing side remains very strong.
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