MHRIL - Mahindra Holidays & Resorts India Limited Share Price

Management provided a strong outlook during the Q1 FY'26 earnings call for Mahindra Holidays & Resorts India Limited, indicating confidence in the growth trajectory amid a robust demand for leisure holidays. Notably, the industry-level Average Daily Rate (ADR) saw a 7% increase YoY in May, and occupancy levels remained high at over 85%, despite geopolitical tensions affecting short-term performance.

For the financials, standalone profits surged by 69% YoY, with a PAT margin expanding by 6.8%. The consolidated profit was reported at INR 7.2 crores, up 18% YoY, factoring in a negative foreign exchange impact amounting to INR 28 crores. Standalone total income reached INR 411 crores (up 7% YoY), and EBITDA grew by 42% to INR 161 crores"”the EBITDA margin now at 39%.

Key forward-looking points include:

• Targeting a gross addition of 1,000 rooms by March 2026, with a strong pipeline already in place.
• A commitment to improving member experience with digital engagement tools, aiming for higher customer satisfaction and efficient onboarding.
• Continued investment in sustainability, with solar installations reaching 41% of total demand.
• An ongoing tech transformation, including trialing a contactless check-in system.

Overall, the management expressed optimism about maintaining growth momentum due to supportive macroeconomic conditions, government investments in tourism of 20,000 crores INR toward developing 50 destinations, and the company's focus on enhancing service quality and operational efficiency.

Q&A Section Summary from Earnings Transcript (July 24, 2025)

Question 1: Pankaj Kumar: On inventory additions, how do you see challenges in adding new resorts on lease given current demand?

Answer: We focus on becoming more present in regions we currently lack, especially in the eastern part of India. We have a pipeline of five ongoing projects, expected to deliver about 500 to 600 rooms over the next 12 to 18 months. We're not facing challenges actively acquiring new properties, and our funnel for inventory remains strong with about 65% to 70% visibility on future projects.

Question 2: Pankaj Kumar: How do you see member additions for the year, given the current run rate?

Answer: Member addition is separate from inventory; they operate on different tracks. While we introduced targeted cohorts for improved service, focus is also on quality, impacting our addition rate. We expect to maintain current run rates in upcoming quarters while ensuring member experience remains our priority.

Question 3: Pankaj Kumar: Regarding resort income growth, how does it reflect on future quarters?

Answer: Both rental income and enhanced experience packages will drive growth. We're refining our approach to guest experiences, ensuring they align with our service standards. Therefore, we anticipate this trend will continue as we strengthen these areas.

Question 4: Harshal Mehta: Are there other operations bleeding money apart from HCRO?

Answer: No, HCRO is our main concern. While it's stabilizing, the geopolitical situation impacts visitor numbers. We're not anticipating further funding needs but are driving towards operational efficiency and improved cash flow.

Question 5: Param Vora: Are you seeing member conversions from tier 2 and 3 cities different from metro areas?

Answer: Despite income levels rising in tier 2 and 3 cities, our membership mix remains constant. Our offerings attract similar interest across these demographics, indicating that our product appeals uniformly regardless of urban or rural locations.

Question 6: Rama Krishna Neti: On AUR, should we see around 7%-8% as the new normal going forward?

Answer: We think the current AUR may be peaking, but future fluctuations depend on customer preferences. Our focus is on adapting to what the target demographics desire, hence it's difficult to provide a definitive figure.

Question 7: Aditya Soni: Do we have plans to narrow down losses in non-VO operations?

Answer: We consider holistic operational performance rather than segmenting into losses. Our focus should be on the overall profit growth trajectory rather than just isolating specific metrics that may show temporary setbacks.

This summarizes the key questions and detailed responses focused on inventory, member additions, operational performance, and market strategies for Mahindra Holidays & Resorts India Limited.