Mahindra Holidays Q2 Results Review - Moderate Operationally, Healthy Financially: Dolat Capital

Dolat Capital Report

Mahindra Holidays and Resort India Ltd.’s Q2 FY24 operating performance and revenue growth was moderate. Ebitda was healthy led by lower sales and marketing and rent costs. Standalone revenue/ Ebitda/adjusted profit after tax grew by 8.5/13.4/11.9% YoY. Holiday Club Resorts OY was weak with revenue/Ebitda of -1.3/-15.8% YoY in euro.

Mahindra Holidays has got reasonably re-rated over the trailing year with ~50% plus returns. We see scope for further re-rating over the next one-two years driven by healthy room additions and consequent member additions. These shall be aided by turnaround in Holiday Club Resorts OY and likely strategic sale in it to recoup investments.

Broadly maintain FY24/25 estimates. Reiterate 'Accumulate' with revised target price of Rs 430 at 18 times FY26E enterprise value/Ebitda (earlier Rs 370 at 18 times FY25E EV/E) and nil value to HCRO.

Structurally the business is improvising and is a positive. Accelerated member adds is key trigger from hereon. We remain hopeful on it.

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