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(Lower Price Band)

Issue Open: June 23, 2009

Issue Close: June 26, 2009

Issue Details

Face Value: Rs 10

Present Eq Paid up Capital: Rs78.3cr

Post Issue Eq Paid up Capital: Rs84.2cr

Issue size (shares): 0.93cr#

Issue size (amount): Rs254.8cr - 301.1cr**

Issue Price: Price Band of Rs275 – 325

Promoters holding pre-issue: 93.6%

Promoters holding post-issue: 83.1%

**at Lower and Upper price band # Fresh issue of 0.59cr shares and an offer for sale of 0.34cr shares by Promoters

Book Building


At least 60%


Up to 10%


Up to 30%

Post Issue Shareholding Pattern

Promoters Group

MF/Banks/Indian FIs/FIIs/Public & Oth


    • 83.1


    • 16.9


Girish Solanki

Tel: 022 - 4040 3800 Ext: 319 E-mail: girish.solanki@angeltrade.com

V Srinivasan

Tel: 022 - 4040 3800 Ext: 330 E-mail: v.srinivasan@angeltrade.com

June 23, 2009

Mahindra Holidays

IPO Note

Apply at Leisure

Leader in Leisure Hospitality Segment: Mahindra Holiday Resorts India Ltd. (MHRIL), which commenced operations in 1996, is the market leader in the emerging Leisure Hospitality Segment. MHRIL operates 1,261 apartments spread across 27 resorts in India and Thailand. It owns around 11 resorts while the remaining are on lease. MHRIL accounted for 72% of the total active members across the Vacation Ownership industry in India with Resort Condominiums International (RCI) up to May 31, 2009.

Unique Business Model: The company has a unique membership driven business model, which is based on the concept of time sharing. While addition of new members results in growth on account of the admission fees received, entitlement fee and annual subscription received from the existing customers are annuity in nature. The company also follows the right-to-use model as a result of which it has the ownership right over the assets acquired by it. Moreover, its mixed-use model of being a vacation ownership company along with providing non-members access to its unutilised apartments on a per-night-tariff basis enables it to enhance its Revenues through optimum occupancy.

Robust Growth in Membership: The company’s total membership enrolment posted a CAGR of 33% over the last three years and stood at close to 93,000 members as of May 31, 2009. The company managed to add 19,292 members in FY2009 overcoming the economic slowdown. The company’s member addition in FY2009 was only slightly lower than FY2008 numbers.

Rationale for our Subscribe (Lower Price Band) recommendation

MHRIL is being priced at a ‘considerable’ premium to other listed hospitality players, which already have premium properties. Nonetheless, we believe that the good reputation enjoyed by the promoter group, justifies the premium valuation for the company to an extent, and hence we expect the IPO to be received well in the primary market. We estimate that at Rs275 (lower end of the Issue price band), the stock would trade at 15.2x FY2011E Earnings post dilution. Further, based on our working on the profits earned per member we have arrived at a value of Rs2,494cr for its business, which translates into a per share value of Rs296. Hence, we recommend a Subscribe on the IPO, albeit at the lower end of the price band.

Our Assumptions: 1) Average revenue per member of Rs2,25,000; 2) Estimated capex of Rs34,200 to be made per member addition; 3) Marketing costs of Rs75,000/new member; and 4) Cost of providing service for the next 25 years

Rs63,925/new member.

Exhibit 1: Objects of the Issue

Particulars Expansion of resort at Ashtamudi

Amount (Rs cr) 33.2

Expansion of resort at Coorg Renovation of newly acquired Resort at Ooty Setting up new resort at Tungi Setting up of new resort at Theog Total

16.3 8.3 80.5 72.7 211.0

Source: Company RHP; Note: Total Fund requirement for the above projects is Rs236.9cr of which Rs25.9cr has already been spent


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