Feb 08, 2013, 09.31 AM IST | Source: CNBC-TV18

Mahindra Holidays has target of Rs 350: PN Vijay

Mahindra Holidays and Resorts India has target of Rs 350, says PN Vijay, Portfolio Manager. Over the last five years its room inventory has gone up three times to over 2000 and the number of locations has also increased considerably. Its membership has also shown a Compounded Annual Growth rate (CAGR) of more than 20 percent.

Mahindra Holidays and Resorts India has target of Rs 350, says PN Vijay, Portfolio Manager.

Vijay told CNBC-TV18, "Mahindra Holidays and Resorts India is a concept stock. It belongs to the large Mahindra Group. It is a market leader in the leisure hospitality business. It has got a very powerful brand Club Mahindra. Apart from that it has rest, break, fun days and a few others."

He further added, "The good thing about Mahindra has been the growth. Over the last five years its room inventory has gone up three times to over 2000 and the number of locations has also increased considerably. Its membership has also shown a Compounded Annual Growth rate (CAGR) of more than 20 percent."

"The last quarter was reasonable for Mahindra. The turnover went up about 8 percent or so to Rs 180 crore and the profits etc. followed a similar pattern. Going forward, I think the positives for Mahindra Holidays are it is a concept stock and leisure hospitality in India is really catching on as domestic tourists spend more and more of their time in leisure and travel within India to short destinations and so on."

"The capital expenditure is financed almost entirely out of internal accruals and membership, both are interest-free and last but not the least the company has realized the potential for membership for Non-Resident Indians (NRI) who mandatorily come once a year to India and are doing more of holidaying. So they have just opened an office in Dubai which is raking in good numbers. So all this is a great opportunity."

"It is almost like a Fast Moving Consumer Goods (FMCG) stock if I may call it and it is trading around Rs 295. I do not think it will run away but it will have a steady growth of about 20 percent or so per annum and I am projecting a target of around Rs 350 in the next 12 months. There are no great risks associated with this investment."

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