Mahindra Holidays IPO - Avoid

@Club Mahindra Resort, Binsar

Image by manishmo via Flickr

Mahindra Holidays and Resorts India (MHRIL) has opened for subscription today with an initial public offering of 92,65,275 equity shares of Rs 10 each for cash at a price to be decided through a 100% book-building process.

The bid/ issue will close on June 26, 2009. The IPO price band is fixed at Rs 275-325 per share. The size of the issue stands Rs 301 crore at the upper end of the price band and Rs 255 crore at the lower end of the band. The issue comprises a fresh issue of 58,96,084 equity shares and an offer for sale of 33,69,191 equity shares by Mahindra and Mahindra (the “selling shareholder”). The issue would constitute 11.0% of the fully diluted post-issue paid-up capital of the company. 

This company’s income mainly depending on new member additions and annual fees received from it’s members. Their scheme resembles MLM schemes with no real utility to the members. We strongly believe that their business and revenue models are not sustainable. This issue is beneficial only to the “selling shareholder”. It would definitely go below the offer price and we wouldn’t recommend buying of this company even then. Avoid this issue for peace of mind.   

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