Experts' reaction mixed on Mahindra Holidays IPO

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Mahindra Holidays and Resorts India (MHRIL), one of the leading leisure hospitality providers in India, is entering the capital market with an initial public offering of 92,65,275 equity shares of Rs 10 each on July 23. The issue will close for subscription on June 26, 2009.

The IPO price band is fixed at Rs 275-325 per share. The size of the issue is Rs 301 crore at the upper end of the price band and Rs 255 crore at the lower end of the band. M&M (Mahindra and Mahindra), promoter of the company, will raise Rs 90.7-123 crore from the sale of 33 lakh shares and it will hold 83% of the Mahindra Holidays post issue.

Moneycontrol conducted a poll on market experts to check whether to apply for the public issue or not. Experts' reactions were mixed.

Experts/Company	Poll Result	Experts view
Manish Bhatt (Prabhudas Lilladher)	Apply	One could subscribe to the issue with a short-medium term view. It looks good after looking at the company's performance and Mahindra as a brand name behind the company. Earlier the company sold a 2% stake to SBI and 1% stake to Jacob Ballas as pre-IPO placement at Rs 478/share in January 2008. So its price band also looks attractive.
SP Tulsian (Investment Advisor)	Don't Apply	Mahindra Holidays' IPO looks expensive as compared to valuations of shares of other hotel and resort companies. So he advised don't apply for the issue. Its available at 25 P/E, which is higher than industry P/E.

 

 

 

 

 

 

 

 

 

 

 

 

The issue comprises a fresh issue of 58,96,084 equity shares and an offer for sale of 33,69,191 equity shares by Mahindra and Mahindra (the "selling shareholder"). The issue would constitute 11.0% of the fully diluted post-issue paid-up capital of the company. 

The proceeds from MHRIL's proposed issue are expected to be deployed in the setting up of new projects and expansion of some of the existing resorts, to provide a larger range of resorts, and hence a wider choice of holiday destinations to members.

The global coordinator and book running lead manager (BRLM) is Kotak Mahindra Capital Company Limited. HSBC Securities & Capital Markets (India) Private Limited and SBI Capital Markets are the BRLMs. The equity shares are proposed to be listed on the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited.

MHRIL, one of the leading players in the leisure hospitality industry, offers quality family holidays primarily through vacation ownership memberships

It had sold a 2% stake to SBI and 1% stake to Jacob Ballas as pre-IPO placement at Rs 478/share in January 2008. It raised Rs 120 crore through a 3% sale.

Its reported FY09 sales were at Rs 400 crore and profit was at Rs 80 crore.