Mahindra Holidays and Resorts India Limited (MHRIL) is a leading leisure hospitality provider in India, offering family holidays primarily, through vacation ownership membership. The company reported strong growth and added approximately 21 thousand and 19 thousand customers during FY08 and FY09 respectively. Strong customer base, nation wide presence and impressive financial performance are its key positives. On the flip side, there is inadequate room inventory and the unconducive business environment affecting descretionary spends are likely to influence performance in the medium term. The company's issue price band of Rs275 - Rs325 per share discounts its FY09 earnings at 29.0X – 34.3X. This valuation is high compared to the other players in the industry. Despite the fact that MHRIL is one of the largest players in the industry, this valuation is expensive. Given its expensive valuations at the offer price, we believe that there is limited upside for investors in the medium term.
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