Mahindra Holidays & Resorts India Ltd (MHRIL) is incorporaed in 1996. MHRIL is an
established player in the leisure hospitality segment, and provides holidays through
vacation ownership memberships. The members enrolled for the company’s
offerings can reside at resorts in a range of locations, for a pre-determined number
of days for a fixed period.
MHRIL’s flagship brand is Club Mahindra Holidays, which has been selected as
Superbrand 2009. MHRIL has also introduced new vacation ownership offerings such
as Zest and Club Mahindra Fundays, Mahindra Homestays, travel and holiday related
services through club mahindra.
The cumulative member base increased to 92,825 in fiscal 2009 from 38,691 in
fiscal 2006. As of May 31, 2009, MHRIL has 96,067 members and 27 resorts across
India and Thailand, of which it own 11 properties and others are leased. About
35.18% of new member additions in FY09 came from referrals by existing members.
Objects Of The Issue
Investment Rationale
Market leader: It is one of the leading leisure hospitality providers in
India. The Club Mahindra vacation ownership members increased to 96067
members in May 2009 from 38,691 members in 2006.
Domestic expansion: The Company is expanding its network by launching
seven new projects at Pondicherry, Kumbhalgarh (Rajasthan),
Kodambakkam (Tamil Nadu), Binsar (Uttaranchal), Theog (Himachal
Pradesh) and Tungi (Maharashtra), which will increase its top line in the
long run.
Expanding internationally: It is in the process of evaluating markets such
as South Africa and China, and it has also plans for investment in Austria.
This will increase its member base and resort inventory thus resulting in
increased revenues.
Investment Concern
The company’s revenues are highly dependent on the travel industry and
declines in or disruptions to the travel industry, such as those caused by
terrorism, natural disasters, financial instability or a downturn in economic
growth, may adversely affect its financial condition and results of
operation.
Industry Profile
The domestic trips are expected to grow at a CAGR of 11.7% over 2007-
2012, to reach approximately 871 million trips in 2012 from 527 million
domestic tourists in the year 2007.Further the domestic tourism
expenditure is expected to rise to Rs 2,621.1 billion, growing at a CAGR of
13.6% over 2007-2012.
Valuation
The company has priced its issue at 29.02x of its FY09 earnings. The issue seems to
be normally priced compared with its peer. Further its consistence financial
performance, growing Indian economy and increase in consumer spending looks
attractive for the company. So we recommend to “SUBSCRIBE” the issue for long
term perspective and listing gains.
