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  • Stock recommendation: MHRIL – BUY – TP Rs.390

    Publish date: August 13, 2018


    Result Update

    MHRIL Q1FY19 revenue was mixed bag with membership addition was ahead of estimates while VO income was below our estimates. The company has adopted new accounting standard (Ind AS 115), due to which actual reported Q1FY19 numbers are not comparable. The company has also reported Q1FY19 numbers under previous Ind AS 18 and we have analysed results based on the same.

    Key Highlights

    • Standalone net revenue for the quarter grew by 6.4% yoy to Rs 2.9 bn and was broadly inline with our estimates driven by strong growth in resort income while VO income was lower than our estimates.
    • EBITDA margins at 21.7% was slightly below our estimates with PAT grew by 13.8% yoy at Rs 368 mn.
    • MHRIL has added 4577 new members (up 14.3% yoy) which took cumulative membership base to 240,369 up 8.3% yoy. The company has not added new inventory in Q1FY19, however it is on track to add 500 rooms in next two years through greenfield expansion.

    Valuation & Outlook

    • We have maintained our revenue and earnings estimates based on previous Ind AS 18. The change in AS has no impact on company fundamentals, profits over membership tenure, operating and free cashflows, etc.
    • The stock is presently trading at FY19E/20E PE of 21.8/19x based on EPS of Rs. 12.8/14.7 respectively. We maintain Buy on the stock with unchanged target price of Rs 390.

          

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