Tuesday, June 23, 2009

Mahindra Holidays IPO

Another R power haaahaa just kidding investor friends. SOme things dont come cheap and it is one of them the company has a business model which some may call fraudulent some say they dupe their clients I say its solid> Think about a stupid club you are stuck with cos you piad huge money on the enrollment after that you visit the place na. Same goes here. Think about Mahindra its TATA's in the making Satyam and now many more in the pipeline. But these are philosophical which should not be under my purview when I am talking about the IPO fundamentally.
Whenever I study the IPO i measure it with listing gains. Here my guess is that it will show 400 and if market is in distress 180 is not away. Future Group R power name big bangs and they suck. Because atlast its the valuation that plays the spoil sport for the built in EUPHORIA. 300 crores is what they are mopping up. Think about R jhunjhunwala and FI's its a peanut for them to manipulate the small kid of the big group. You talk about the asset value business model everything apart at sensex 14 times this stock deserves a premium but how much is the big question. 9830 clients /customer base is what I see the company growing at on an avg for next 3 years, maning CAGR of 33-35%. Dont look at the past simply think my past is my girl friend and future is my wife. Friends remeber the hype over JYothi LAbs at that point of time also I had the same reason why would you invest in an IPO when better players are available with proven record. Compare a business model on similar guidelines Country Club it definitely a better bet with proven record and decent model not comparable to Mahindra's as its not in fooling business it is also available at decent valuations.
  • The stock at 275 is available at 28 times forward. Going forward also at 26 times on upper band it stretches further to 32 odd times.
  • The stock is a group kid of Mahindras, premium justified but not twice the real valuation
  • HNI's to leverage FI's to invest heavily closed ciruclation stock can touch 350 500 look at tech mahindra 350 -1100 - further 1500 and than dead. SO dont go by valuation theory purely
  • Invest with a high risk apetite though on listing risk seems negligible. The IPO cut-off will be around 290-310.
  • The stock will list at a premium beacuse HNI's breakeven formula will force it to blaze. After that do i need to tell exit with a tight stop of 265.

And do not enter till the euphoria dies and the stock is available at less than 14 PE.

Talk about proxy business, Hotels, what else if they are valued at 7-10 times and that too not on NAV adjusted basis. You cannot expect a big bang from MAhindra But market players will make it and keep it expensive before they decide to exit

So given the sentiment and IPO size brand I reteriate a subscribe a buy wid a sell on IPO listing. The returns are there atleast 10-15% on listing days. Mahindra's can make it even cheerful at giving discount to holders and gettign the cut off too 275.

Fundamentally this stock i not worth keeping long term at current price. The valuation of Land Bank to expected market cap is more than DLF. COmparing the valuation of Hotel industry from PE ratio play it is more than Indian Hotels and Asian Hotels.

Wha else I need t o tell you small investors subscribe I assign a fare rating of 3.5 out of 5 which means subscribe for sell with lesser risk on listing day due to HNI breakeven formula.

Happy Investing,

Aashish Tater

No comments: