Ace Investor Vijay Kedia Checks into this Multibagger Hotel Stock. Will it be a Profitable Vacation?

Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard.

This is where elite investors outperform the market.

Guru investors are top investors who have mastered the art of value investing. These are the people who've compounded their wealth from stocks at a rate significantly higher rate than the benchmark indices.

Many investors closely track the investments of superstar investors like Rekha Jhunjhunwala, Ashish Kacholia, Sunil Singhania, and Vijay Kedia for valuable market insights. Each investor's public portfolio reflects their unique investing style and their preferred approaches.

For those interested in Vijay Kedia's investment moves, here's an update: the ace investor recently included a hotel stock in his portfolio.

Who is Vijay Kedia?

Vijay Kishanlal Kedia is an Indian investor and trader based out of Mumbai and his company - Kedia Securities - is the largest shareholder (after the promoter) in several listed companies.

Kedia has been involved in the Indian stock market since the age of 19. He has been described by many as a 'market master'.

To point out a few of his investments, he bought ACC at Rs 300 in 1992-93 and sold the stock around Rs 3,000 within a year and a half.

During years 2004 and 2005, he picked several multibagger stocks which gave returns of over 1,000% in the next 10-12 years. Few of these stocks were Atul Auto, Aegis Logistics, and Cera Sanitary.

Which Multibagger Smallcap Stock did Vijay Kedia Buy?

The stock in question is Mahindra Holidays & Resorts.

Mahindra Holidays & Resorts India is a leading player in the leisure hospitality industry.

The latest shareholding pattern of Mahindra Holidays & Resorts shows that Vijay Kedia has added a 1% stake in the company, respectively, as of the March 2024 quarter.

Notably, in the December 2023 quarter, his name was missing from the list of shareholders.

While we don't know why he added shares of Mahindra Holidays & Resorts, there are some reasons that we can guess.

#1 Robust Expansion Plan

On 25 February 2024, Mahindra Holidays & Resorts announced its plans to invest up to Rs 45 bn in the next three to four years to double its room capacity to 10,000.

The company is actively pursuing partnerships with state governments besides setting up new resorts, brownfield expansion and acquisitions to achieve the target of increasing room count from 5,000 to 10,000 by FY30.

At the moment, about Rs 8.4 bn of investment is underway for five greenfield, brownfield, and acquisition projects, comprising about 690 keys.

The company is confident that this investment will get scaled to at least Rs 20 bn in the next year, and very quickly we will scale it up to Rs 40-45 bn in three to four years because you need to deliver 5,000 keys by 2030.

It has already tied up with the Uttarakhand government and identified two pieces of land for do Rs 10 bn investment. Then we also signed an MoU with the Tamil Nadu government for about Rs 8 bn investment.

Mahindra Holidays at this moment is engaged with the Odisha government, and it has allotted two pieces of land that will help the company to invest Rs 5 bn, if not more in Odisha.

Besides, the company is still looking at another piece of land in the Puri area.

In January 2024, the company announced that it would invest Rs 8 bn in Tamil Nadu to build three greenfield resorts over the next five to six years. It would be the second-largest investment by MHRIL, following the Rs 10 bn investment in Uttarakhand last year.

MHRIL has 102 resorts across India and abroad as of 30 June 2023. Its subsidiary, Holiday Club Resorts Oy (HCR), Finland, has 33 Timeshare Properties, including nine spa resorts across Finland, Sweden, and Spain.

This strong expansion plan explains Vijay Kedia's decision to invest in the company.

#2 FII Buying

Foreign Institutional Investors (FIIs) have displayed consistent buying activity in stocks over two consecutive quarters.

In the December 2023 quarter, their stake in the company rose marginally from 5.1% to 5.2%. Subsequently, in the March 2024 quarter, they further bolstered their stake to 5.3%.

This consecutive increase in FII buying could potentially be one of the reasons why ace investor might have chosen to increase his stake.

What Next?

According to the company's CEO and MD, Kavinder Singh, Mahindra Holidays & Resorts, which has over 3.5 lakh members, expects to be in the top five largest vacation ownership companies in the world in the next two years, up from its current position at sixth.

Further, it plans to add new destinations for Club Mahindra Members.

The anticipated Compound Annual Growth Rate (CAGR) for hotel demand in India is projected to be 11.6% between FY23 and FY28, this will further help the company's growth.

In the context of downstream growth, the hospitality sector aligns seamlessly with the trajectory of a rapidly growing GDP, increasing per capita income, and rising consumer spending.

This positions Mahindra Holidays in a favourable demand sweet spot as India makes strides towards a US$ 5 tn economy.

A Close Look at the Financials

Over the past three years, the company has demonstrated a commendable growth trajectory, with its revenue expanding steadily at a Compound Annual Growth Rate (CAGR) of 13.3%. This consistent growth pattern underscores the strength and expansion of its business operations.

Moreover, there has been a remarkable improvement in net profit performance. The company has experienced a turnaround from a net loss of Rs 140 million (m) in FY21 to a significant net profit of Rs 1,138 m in FY23.

This positive transformation is evident in the rising net profit margin, which surged from -0.8% in FY21 to 4.5% in FY23. This notable increase in profitability can be primarily attributed to a substantial growth in net sales.

Financial Snapshot (2021-23)

(Rs m, Consolidated)	FY21	FY22	FY23
Net sales	17,300.00	20,133.00	25,170.00
Sales growth (%)	-	16.3	25
Net profit	-140	676	1,138.00
Net profit margin (%)	-0.8	3.4	4.5

Source: Equitymaster

Further, the company's finances are also set to benefit from its strong expansion plan.

How Mahindra Holidays & Resorts Shares Have Performed Recently

In the past one year, shares of Mahindra Holidays & Resorts have gained 100%. In the past month, Mahindra Holidays & Resorts is up 4%.

Mahindra Holidays & Resorts has a 52-week high of Rs 470 touched on 17 October 2023 and a 52-week low of Rs 281.6 touched on 25 May 2023.

It is currently trading at a PE (Price to Earnings) multiple of 44.3x.

About the Company

Mahindra Holidays & Resorts India Ltd is a resort and casino company that operates timeshares.

The company's operating segment includes Mahindra Holidays and Resorts India Limited (MHRIL) and Holiday Club Resorts Oy (HCRO).

It generates maximum revenue from the HCRO segment.

The business sells family-based timeshares and has a variety of vacation options, such as water sports, adventure sports, hobby programs, and camping.

It has a network of resorts that have beaches, wildlife sanctuaries, and cultural landmarks.

For more details, see the Mahindra Holidays company fact sheet and quarterly results.

For a sector overview, read our hotels sector report.

You can also compare J Kumar with its peers:

Mahindra Holidays vs Indian Hotels

Mahindra Holidays vs Advani Hotels

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