Broking house, Prabhudas Lilladher is bullish on Country Club and has recommended buy rating on Country Club with a target of Rs 458.
Prabhudas Lilladher report on Country Club:
Country Club India (CCIL) is India's largest leisure infrastructure company. It has a presence across 150 locations in India and overseas through a combination of owned, leased and franchised properties. CCIL is affiliated with RCI, which gives them access to over 4,000 properties across 101 countries in the world. The company is also upgrading its existing properties and constructing additional rooms and service apartments at existing locations at a total cost of Rs 3.1bn. The target is to achieve a 700-room inventory mark by FY09 from the current 265 rooms. CCIL also plans to foray into Holiday Homes by offering a condominium to members, which is likely to be a key growth driver in the future.
Over the next two years we expect revenues and profits to grow at a CAGR of 48.5% and 45.5% to Rs. 3,241m and Rs 720m in FY09E. At the CMP of Rs 320 the stock trades at 7.0x FY08E and 4.8x FY09E fully diluted earnings of Rs 45.8 and Rs 66.0 respectively. We believe that CCIL should trade at a premium to the current valuations given its strong revenue and profit growth, improving return ratios and visibility of earnings. We initiate coverage with BUY rating and a target price of Rs 458 (10x FY08E), implying an upside of 43%.
