STOCK PITCH

CLUB MAHINDRA
A FLAGSHIP BRAND OF MAHINDRA HOLIDAYS & RESORTS
INDIA LIMITED

STRIPCODE: MHRIL
SECTOR:
HOSPITALITY
THE HOSPITALITY INDUSTRY
A QUICK ANALYSIS
 SECTOR SEGMENTATION
RESTAURANTS
& BARS

ACCOMMODATI
ON

EVENT
TRAVEL
MANAGEMEN
T

RECREATIO
N
 SCENARIOS

GLOBAL DOMESTIC
The global scenario The Indian scenario
seems quite positive. looked positive since the
Currently the hospitality last five years.
industry forms 9% of the Substantial amount of
global GDP. FIIs are being pumped in
Tourism Competitiveness the industry.
Index: The industry forms 6.23
Spain on No. 1, US on % of the national GDP.
3rd,India 52nd 8.7% of the total
Given the usual employment and has a
relationship between the cumulative annual growth
VALUE CHAIN ANALYSIS
Firm Infra: Like any other MNC- CEO,CFO Head
Chef
HR Heavy investments, since this decides quality
Manageme
nt:
Tech For improving Booking Services, Consumer
Development: experience

Procurem Mostly for talent acquisition, raw materials

ent
•Not
Outbound Logistics

•Handlin •Heavy
Marketing & Sales
No such required
•Fuel
g HR service invest •Product
Operations

•Electri
•With required ments

Service
city consumed at
marketca . •This production
•Food
p, decide
•Station
hierarchy s
ery
increase future.
•Spare
s
parts
ACCOMMODATION & RESTAURANT INDUSTRY

PORTER’S FIVE FORCES

 VERY LOW
•Just Cannot be Substituted

MODERATE
•Is strongly influenced by travel and
tourism trends
•the industry is capital intensive.

MODERATE
•Property owners, developers and the
real estate companies, architects,
training service providers, consultants
and technology providers
•Generally Smaller than the company

HIGH
•Quality, Inexpensiveness deciding
factors
•Many Competitors in same segment

VERY HIGH
•Fierce competition, High investments being
pumped
 INDUSTRY GROWTH
DRIVERS

Middle Increase High

in mobile Increase
class Initiative
internet penetrati in
disposa s by
penetrati on inventor
ble state
on and y across
income • Almost and
usage railways,
and 15% national
• Online bookings airlines
consum tourism
Travel through and
ption boards
Agency mobile hotels
pattern interests phones.
ACCOMODATION INDUSTRY

EFFECT OF
MACROECONOMIC FACTORS
 • Direct Relation
• Leisure time dependent industry
GDP Growth • The Net Leisure Time available to the people
in the economy decreases, their time in the
hospitality industry increases.

• Inverse Relation
Interest • Decrease in interest rates means that
Rates people have more money at their
disposal->POSITIVE IMPACT
• Inflation has most of the times
positive impact on the industry
Inflation • Beyond low inflation rates, the
government may sound an alarm,
which might hurt the industry
• Policy on the industry is quite mixed.
• Because of PM Modi, notably increased NRI
travel in the country.
Government • Make in India is expected to increase corporate
expenditure in the hospitality sector in the country.
Policy • Pravasi Divas, Athithi Devo Bhava, the E visa
initiatives, Visa on Arrival facility
 Recent Updates
• According to Association of Tour Operators
of Russia (ATOR) India is on preference lists
of Russian tourists after the Egypt, Turkey
crisis
• According to the data released by Goa
Government, number of charter flights to the
tourism hotspot has drastically decreased
after Crimea Crisis.
• The industry is worried- because of global
scenario of uncertainty; but excited on the
changing domestic political scenario.
• The revenues in the industry are continuously
decreasing due to decreasing sales.
COMPANY ANALYSIS

CLUB MAHINDRA
A FLAGSHIP COMPANY OF
MAHINDRA HOTELS & RESORTS INDIA LIMITED
 Introduction
• Established in the year 1996
• Parent Company: Mahindra Holidays &
Resorts India Limited
• 194 K vacation ownership members, 45
resorts pan India and Certain Locations
Abroad.
• Affiliated to Resorts Condominium
International (RCI), a global holiday
exchange network.
• Current CEO: Mr. Kavinder Singh
• A consistent market share of more than 40%.
 Share Holding Pattern
%Shares 5.053999
2016
7.504492
No Major Change
observed in pattern
43.182628 16.303999
since last 3 years.
4.65745
5.292474
0.107
14.1829 3.715058
Reliance Capital Axis Mutual
Govt Pension Fund Global Morgan Stanley
Nyum Jacob Financial Inst.
Foreign Corporations Retail
Other
LIQUIDITY
 DEBT v/s REVENUES

Club Mahindra
800

700
701.79
600 642.84
500 550.43
400 485 Debt
419.69 403.9 Revenues
300 358.08
306.24
200 243.14
187.85
100

0
2011 2012 2013 2014 2015
 Liquidity Ratio: Current Ratio
4

3.5 3.659
3 3.199
3.133
2.883
2.5
2.654
2 Mahindra
Peer Average
1.5

1 0.8504 0.7638
0.3999 0.3499 0.31025
0.5

0
2011 2012 2013 2014 2015
 Liquidity Ratio: Quick Ratio
4

3.5 3.34
3.12 3.17
2.86
3 2.64
2.5

1.5

1 0.783 0.67
0.5 0.337 0.3 0.263

0
2011 2012 2013 2014 2015
Mahindra Peer Average
PROFITABILITY
 Per Cent Gross Profit Margin
30
27.8
25
22.9 22.18
20
17.7
15 15.7
10 9.549
Club Mahindra
5
Peers
0
2011 2012 2013 2014 2015
-5 -5.206
-10
-15 -13.627 -14.74 -13.868

-20
 Per Cent Net Profit Margin
30
21.09
18.23 16.24
20
12.15
9.94
7.6233 7.4667
10

0
2011 2012 2013 2014 2015
-10
-17.2767
-20 -25.5133
-28.1067
-30

-40
Mahindra Peer Average
 Operating Profit Margin
30
25.64
25 22.61
20.45
20 22.31 18.86
21.12
18.91 19.85
18.76
15 17.71

10

0
2011 2012 2013 2014 2015
Mahindra EIH
 Per Cent Return on Assets
8
6.54
6.04
5.51
6
4.19
4 3.42

2
2.27
1.78
0
2011 2012 2013 2014 2015
-2
-1.87
-4
-4.38
-6

-8 -6.57

Mahindra Peer Average

 Per Cent Return on Equity
25

20.41
20 18.39
16.86

15
11.96
10.81
10

5.08
5 3.92 3.96
2.73 2.12

0
2011 2012 2013 2014 2015
Mahindra EIH
 Percent ROCE
7 6.54
6.04
6 5.51

5
4.19
4 3.42

0
2011 2012 2013 2014 2015
ROCE
PER SHARE RATIOS
 EPS
14
12
12.29 12.48 12.75
10
10.74
8 8.98
6
4
2
0 1.51667 1.51
2011 2012 2013 2014 2015
-2
-4 -2.79667
-6 -4.4667
-5.2667
-8
Mahindra Peer Average
 PBT/Share
25

20
18.94
15 17.86 17.36
16.07
10 11.92

0
2011 2012 2013 2014 2015
-5

-10
Mahindra Peers
VALUATION RATIOS
30
27.36
CLUB
25

20 18.55

15.72 15.13 14.85

15
11.9789

10 8.11016
7.57743 6.98899 6.73284
4.66
5 3.82
2.68 3.03
2.3

0
2011 2012 2013 2014 2015
EV/EBITDA Market cap/Revenue EV/1000
CLUB MAHINDRA’S

SWOT ANALYSIS
 • Customer base of over 194K members
• Brand presence is quite high due to excellent advertising
• New under explored and lesser known locations
STRENGTHS • High Brand Recall
• Good Financial Stand.

• Quality of services and infrastructure is not constant throughout the brand.

• Company policies regarding booking of rooms does not always go well with
WEAKNESS customers
• Constant political disturbances within the country

• Incredible India campaign has had a positive influence on influx

• Domestic travel is increasing India
OPPORTUNITIES • Good Financials can help it in expanding assets and customer base
• Peers not performing well offers a wide range of opportunities

• International hospitality giants are entering all markets and catering to

all segments in this sector
THREATS • Economic downturn might have an effect on equity capital of the
company
 Expansion: A
Opportunity: Reason to Wait
Reason to Buy
 Recent Updates
• Club Mahindra is under a rapid expansion
programme, adding rooms at a good
enough pace- 700 rooms through
combination of newly built properties and
through existing properties for around 600
crores.
HOLD