Result Update: Mahindra Holidays & Resorts India Ltd - BUY - TP Rs.390 - Kotak

MHRIL Q4FY18 results was strong in terms of new membership addition which grew by 50.7%, sequentially. Q4FY18 revenue was below our estimates due to change in accounting methodology, while PAT was ahead of our estimates on higher other income and lower depreciation.

Key Highlights

- Standalone net revenues for the quarter declined by 2.5% yoy to Rs 2.96 bn (vs estimates of Rs 3.25 bn), as the company adopted new accounting policy for recognizing Vacation Ownership (VO) income. Under the new accounting policy, the company adjusted expected revenue loss from VO as against previously providing the same in the other expenses.

- EBITDA margins for the quarter was inline at 21.1% with PAT ahead of estimates.

- After reporting decline in last two quarters, MHRIL reported growth in membership addition in Q4FY18. The company added 6,321 new members (up 50.7% qoq and 2.3% yoy) which took cumulative membership base to 235,792 up 8.1% yoy.

- The company has added 110 rooms in Q4FY18, taking the total room inventory to 3472. MHRIL aims to add 500 rooms in the next two years through greenfield expansion.

Valuation & outlook

- We have adjusted our revenue and earnings estimates factoring in changes related to accounting methodology and higher membership addition.

The stock is presently trading at FY19E/20E PE of 26.3/23x based on EPS of Rs.12.8/14.7 respectively. We maintain Buy with revised target price of Rs 390 (Vs Rs 388).

Shares of MAHINDRA HOLIDAYS & RESORTS INDIA LTD. was last trading in BSE at Rs.334.45 as compared to the previous close of Rs. 333.8. The total number of shares traded during the day was 8121 in over 284 trades.

The stock hit an intraday high of Rs. 339.6 and intraday low of 327.05. The net turnover during the day was Rs. 2733475.

Source : Equity Bulls

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