Dear Investor
Country Club (India) Ltd (CCIL) is one of India’s largest leisure infrastructure company operating a chain of clubs under the brand ‘Country Club’ and timeshare operations under its brand ‘Country Vacations’ at around 186 locations spread across India. Recognizing the demand coming in from the middle and upper middle class population in different parts of the country, CCIL plans to take the count of its clubs and resort properties from 27 to 100 by FY10. Of these 100 properties 42 will be located in tier-I cities with a larger population and income base.
CCIL’s operations span across both the retail and hospitality verticals, leaving no direct competitor for the company. From timeshare perspective the valuations of the company can be benchmarked against peers like Mahindra Holidays and Resorts which has a similar ‘membership driven model’ and is planning to list itself in February 08. At a CMP of Rs 882.5 the CCIL stock is trading at 20.5x its FY08 diluted EPS of Rs 43.1. This appears to be at a 55% discount to Mahindra Holidays, which had been valued at $ 1 bn (Rs 39.5 bn) in a recent stake sale to SBI, which based on our conservative earnings estimates, works out to 45.9x its FY08E EPS of Rs 10.5. We believe that there is a case for upside in valuations of CCIL as we near IPO of Mahindra Resorts. Giving a 25% discount to CCIL we value it at 34.4x its FY08E earnings, the target price according to which works out to Rs 1482 signifying an upside potential of 68% from current levels.
BigGains !!
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