Mahindra Holiday Resorts: Buy Equity shares or Time share?
Sounds a little odd, but Mahindra Holiday Resorts has a great reputation…or rather a background, but has done NOTHING for the shareholder (investor) but it has been a good opportunity for the trader. I have made money as a trader, but nothing as an investor.
So should you buy the share and hold on for a long time? Well it depends on your expectation, but in the current market correction/slide it has come down dramatically…and is available at an attractive price. Or is it?
It is available at a price of Rs. 200 – vs an IPO about 10 years ago at Rs. 300. I remember seeing this share at Rs. 540…I guess that was its peak, and last year they did give a bonus share. Bonuses worry me. Does it mean there is a cash flow issue? I do not see that in the balance sheet…but yes it has been hammered down.
Now if a company is not so good for its shareholders, it should be good for its Time-share owners, right?
well read what a financial planner says…it is a little dated article. I have no clue what changes have been made by the management since then…but read on…
https://www.tflguide.com/club-mahindra-membership-fees-review/
Krish
Never buy a company stock which has not one satisfied customer. It is not just bad word of mouth, some group litigation or WhatsApp rumor or enquiry by authorities can shut the door fully.
Bhupesh
They are victim (or not yet) of their own greed, it is only groups’ brand images which seems to have delayed this fall.
Knowing well that sell of this discretionary spend product will hit hard quite soon post 2009 meltdown, they were the first one to come up with the IPO post 2009 market fall, which they had to abandon few quarters back because of market condition.
Time period between 2004-07 is crucial they took full advantage of non-existing competition, new aspiring middle class, easy credit availability. They sold membership with just 10% down payment (~ 15-30K in that time), also gave back that amount as joining gift (Ref: https://what-goes-in-my-mind.blogspot.com/2008/04/club-mahindra-different-cities.html), marketing mis-sold membership, even advised people to just give their credit card details, pay EMI until you receive your free gifts and then cancel the credit card. Management kept blind eye to these practices as they were happy seeing numbers build up pre IPO to get good valuation. In subsequent years they had to 1) increase the down payment 2) remove free gift 3) struck off many membership, reverse the corresponding receivables from balance sheet (unpaid membership fee) and 4) change the entire top management tier [except the chairmen 🙂 ] .
If you follow their chairmen’ interviews on various forum 2010 onward, for 2-3 years he kept repeating, we did this-that, we will bounce back substantially. Ref https://what-goes-in-my-mind.blogspot.com/2010/10/mahindra-holidays-admits-their-staff.html
I have found it most un-ethical product and business practice from any reputed business house in India, very similar to selling ULIP or other endowment product to unsuspecting customers on false promises. I have more written on my blog, few links are updated above. Moneylife did one article on Mahindra Holidays on 2010 based on my input. https://www.moneylife.in/article/club-mahindra-members-are-not-exactly-having-a-great-holiday/11405.html