Mahindra holidays is betting on the travel itch
Indians have sat home for too long. the pandemic made them miss their annual trips, but the travellers now are craving for at least a few mini vacays. in this, homegrown Mahindra Holidays & Resorts is having the last laugh.
its stock is up 67% since April 1. at a time when the hospitality sector has been severely hit by Covid, this comes as a breather.
the Dalal Street bulls are betting big on the company and its business. and as the wedding season begins, another boom is around the corner.
Mahindra Holidays is cash rich at ₹950 crore and debt free. in contrast, hotel players are grappling with piling debt. Indian Hotels Co Ltd (IHCL), for example, has a net debt of ₹3,612 crore, which it is looking to shed.
its income has also picked up, and is exceeding the business of legacy players. Mahindra Holidays’ consolidated income stood at ₹418.29 crore for Q1. IHCL had a revenue of ₹320 crore in comparison.
the way Mahindra Holidays does business is different. usually, hotels first build property, then try to sell it. Mahindra Holidays, on the other hand, first gets the customers then uses that cash to build property. this ensures they make money, pandemic or no pandemic.
the company is now getting ambitious. it is eyeing acquisitions since travel is slowly taking off. in October 2020, it acquired a minority stake in adventure tours company Rocksport. this adds outdoor escapades to the Mahindra Holidays bouquet.
Club Mahindra, which has existed since 1996, helps travelers book resorts based on their budget. there is an annual membership fee charged.
with Covid easing, vacation spots like Goa and Shimla are picking up once again. rather than large hospitality chains, customers today prefer luxury resorts and wilderness travels. this is where players like Mahindra Holidays gain.
brokerages are expecting a further upside in the stock. with acquisitions on the radar, the brand is getting bigger. Indians out on ‘revenge travel’ during winters may be the next big signal Mahindra Holidays is waiting for.