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Mahindra Holidays & Resorts India Ltd

| Business Update Call

NEUTRAL SENTIMENT

Report Source

⬤24th Nov 25

Summary : Mahindra Holidays is pursuing an ambitious F'30 strategy to become India's top leisure hospitality player by scaling its core business, launching a new luxury brand, and expanding inventory with a capital-light model, despite near-term earnings growth concerns.

Management Perspective positive : I'm very happy to host all of you as we articulate our strategy for F'30. I think we had unveiled a very comprehensive strategy. Our aspiration really is to be India's No. 1 leisure hospitality player. I do believe we can meet it through internal accruals largely, and we wouldn't have to go into debt. This is a very exciting journey for us.

Concall Report Analysis & Insights

Business Overview

  1. Mahindra Holidays aims to be India's No. 1 leisure hospitality player.
  2. The company is scaling its core Club Mahindra business by enhancing member delight.
  3. A new luxury hospitality brand, Mahindra Signature Resorts, is being created.
  4. The new membership plan, Keystone, offers more privileges and flexibility.
  5. The strategy targets a 3x growth in keys and revenue, and 4x PAT by F'30.

Future Growth Prospects

  1. Targeting 12,000 keys by F'30, with 10,000 for Club M and 2,000 for Signature Resorts.
  2. Accelerated inventory addition is planned, with visibility for 3,000+ keys.
  3. Resort transformation includes upgrading existing resorts and shutting down four for complete overhaul.
  4. The company is moving towards a capital-light model for expansion.
  5. Leisure hospitality market is growing at double the rate of in-city hospitality.

Management Insights

  1. Our F'30 strategy aims for 3x growth in keys and revenue, and 4x PAT.
  2. We are adding 3,000+ keys and transforming resorts, including shutting down four for renovation.
  3. Keystone, our new membership plan, simplifies options from 23 to 12 and adds flexibility.
  4. Mahindra Signature Resorts will target the 4 billion branded leisure market by F'30.
  5. We are shifting focus from member additions to rooms and revenue per room as key metrics.

Signs of Skepticism

  1. Earnings CAGR appears muted compared to revenue growth targets.
  2. Specific details on new Signature resort locations are being kept confidential.
  3. Management did not elaborate on Keystone's expected margin improvements.
  4. The timeline for full details on new initiatives is not yet fixed.
  5. Overseas business in Finland is still in a 'sustained mode' with no immediate revival plan.

Risk Factors

  1. Adverse weather patterns impacted occupancies in Himachal and Uttarakhand.
  2. Marginal drop in Goa occupancies observed over the last 2-3 months.
  3. Initial operating expenses for new resorts may impact profitability growth.
  4. Reduced treasury income due to increased capex will affect overall PAT.
  5. Lag in inventory build-out and profitability growth for Signature Resorts.

Good To Know

  1. Club Mahindra will rebrand to Club M as part of its refreshed identity.
  2. The new luxury brand, Mahindra Signature Resorts, will focus on immersive, experience-led travel.
  3. The first Signature resort is under construction in Theog, Himachal, targeting F'27 opening.
  4. The company is moving towards a 30% owned, 70% leased/management contract model for new inventory.
  5. The new Keystone plan reduces seasons from four to three and includes concierge services and a buyback provision.

Key Drivers

  1. New luxury brand launch.
  2. Significant increase in resort keys.
  3. Shift to capital-light expansion.
  4. Enhanced member experience.

Key Analyst Discussions

Market Trends & Consumer Behavior

  1. 80% of surveyed people prefer experiential travel over normal travel.
  2. 56% of people book travel a week before, indicating a strong last-minute booking trend.
  3. Weddings and MICE are identified as fast-growing segments in the leisure market.
  4. Increasing affluence and government push for tourism infrastructure are positive trends.
  5. People prefer branded keys due to assured quality and trust.

Financial Highlights

  1. Annual renovation capex is typically INR40 crores, expected to triple for a couple of years.
  2. Overall capex for this year is projected at INR500-600 crores, and INR700-750 crores next year.
  3. The 4x PAT growth target by F'30 is confirmed, excluding treasury income impact.
  4. Return ratios are expected to improve due to the capital-light expansion model.
  5. Earnings growth may lag revenue due to reduced treasury income and initial opex for new resorts.

Product Composition

  1. Keystone is a new membership plan for new customers, with an upgrade path for existing members.
  2. Keystone simplifies plans from 23 to 12, with 3 seasons and 4 tenures.
  3. Mahindra Signature Resorts will operate on a conventional hospitality model, not vacation ownership.
  4. Keystone members will have commercial access to Signature Resorts.
  5. Signature Resorts will target 55-60% occupancy and ARRs of INR12,000-INR15,000.

Strategic Considerations

  1. The company is focusing on premium member additions and upgrades.
  2. The strategy involves scaling the core business and building a new luxury brand.
  3. The overseas Finnish business is in a sustained mode, with no immediate plans for sale or revival.
  4. New inventory will be a mix of owned, leased, and management contract resorts.
  5. The company is not actively adding keys outside India, relying on partners for international destinations.