Buy Mahindra Holidays; target of Rs 305: Firstcall Research

Firstcall Research’s report on Mahindra Holidays and Resorts India

“Mahindra Holidays & Resorts India Ltd., (MHRIL) is a part of the Leisure and Hospitality sector of the Mahindra Group and brings to the industry values such as Reliability, Trust and Customer Satisfaction. Started in 1996, the company’s flagship brand ‘Club Mahindra Holidays’, today has a fast growing customer base of over approx 180,000 members and 41 beautiful resorts at some of the most exotic locations in India and abroad. Mahindra Holidays & Resorts India Limited is part of the USD 16.5 billion multinational Mahindra Group. With over 200,000 employees in 100 countries across the globe, the Group is also among India’s top ten Industrial Houses with interests in aerospace, aftermarket, agribusiness, automotive, components, consulting services, defense, energy, farm equipment, finance and insurance, industrial equipment, information technology, leisure and hospitality, logistics, real estate, retail, and two wheelers.”

“The company’s net profit jumps to Rs. 234.66 million against Rs. 203.07 million in the corresponding quarter ending of previous year, an increase of 15.56%. Revenue for the quarter rose by 9.01% to Rs. 2065.13 million from Rs. 1894.44 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 2.67 a share during the quarter, registering 15.55% increase over previous year period. Profit before interest, depreciation and tax is Rs. 500.66 million as against Rs. 407.30 million in the corresponding period of the previous year.”

“At the current market price of Rs.270.45, the stock P/E ratio is at 25.13 x FY15E and 23.07 x FY16E respectively. Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.10.76 and Rs.11.72 respectively. Net Sales and Operating Profit of the company are expected to grow at a CAGR of 9% and 8% over 2013 to 2016E respectively. On the basis of EV/EBITDA, the stock trades at 11.24 x for FY15E and 10.23 x for FY16E. Price to Book Value of the stock is expected to be at 2.71 x and 2.42 x for FY15E and FY16E respectively. We recommend ‘BUY’ in this particular scrip with a target price of Rs. 305.00 for Medium to Long term investment”, says Firstcall Research report.

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