Expect 40% price appreciation for Mahindra Holidays in 12 months

Mahindra Holidays & Resorts India Ltd (MHRIL) is a part of the leisure and hospitality sector of the Mahindra Group, offering quality family holidays, primarily through vacation ownership memberships. It was started in 1996 under the company’s flagship brand “Club Mahindra Holidays” and today has over 207,000 members and 50 resorts at some of the most exotic locations in India and abroad. MHRIL is part of the USD 16.7 billion multinational Mahindra group. With over 180,000 employees in 100 countries, the group is also among India’s top ten industrial houses, with interests in aerospace, agribusiness, automotive, components, consulting services, defence, energy, farm equipment, finance, insurance, industrial equipment, information technology, leisure and hospitality, logistics, real estate, retail and two wheelers. Over the last decade, MHRIL has established itself as a market leader in the family holiday business. The company has followed a two-pronged strategy by increasing its bouquet of resorts to provide more variety in holidaying options and enhancing its service levels to its members by providing support at every point of interaction.

MHRIL had reported a 4.5% growth in standalone profit after tax at Rs 31.8 crore for the fourth quarter of 2016-17, while the standalone profit after tax stood at Rs 30.5 crore in the corresponding quarter of the previous financial year. The total income grew by 26.3% at Rs 315.7 crore in the last quarter of FY17, from Rs 249.9 crore in the same period last year. For the year ended 31 March 2017, the company’s profit after tax grew by 39% to Rs 145.5 crore, from Rs 105 crore in the previous fiscal. 

The total income for FY17 went up by 43% to Rs 2,309.9 crore, from Rs 1,612.9 crore in the previous fiscal. The company has also announced the issue of bonus shares in the proportion of 1:2, that is one bonus equity share of Rs 10 each for two equity shares held, and has fixed 11 July 2017 as the record date for entitlement of the bonus equity shares. The company is enhancing the aspirational value of its brand through innovations in creating unique experiences at its resorts by adding five new resort destinations contributing to significant growth in member additions, revenue and profits. 

Plus the company has four properties in the pipeline: two in Himachal Pradesh, one each in Goa and Kerala. The four projects in the pipeline are a mix of both greenfield and expansion of current properties, with an overall investment of Rs 600 crore. The stock, currently quoting at Rs 650 on the Indian bourses, is an excellent buy for yearlong investment horizon, with a 40% price appreciation.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.