Club Mahindra’s financial results were out today; the company Mahindra Holidays (which owns the brand) has shown a growth in profit after tax of 20%, to 30.13 cr. from 25.20 cr. last year.
Revenues were up about 9% to 249 cr. in the quarter. But they managed to keep employee costs absolutely flat and even managed reduced depreciation charges in the quarter, which should raise a few eyebrows.
However the company continues to be substantially over capacity. We have written about this:
This is a problem that continues even now.
They claim to have 203,000 members. Each member gets a week free, every year.
They have 3004 rooms. If you run it on full tilt (no down time) each room can serve a maximum of 52 customers per year. Meaning, they can serve a maximum of 3004 x 52 = 156,208 customers per year.
And that’s assuming all the customers are perfectly fine with spreading their holidays out evenly through the year. Kids’s exams, weekdays etc. don’t bother these awesome customers.
Even in this idealistic situation, Club Mahindra will have about 47,000 customers who they can just not serve. (That’s about 30% more than they can serve).
In reality, strange things happen:
They have planned a 500 room expansion in the next two/three years, but you can see that still won’t be enough – they’ll add only about 15,000 serveable customers and then they’ll go get some more customers next quarter that will add to the buffer.
While this is great as a business today, the lack of serviceability will impact the brand in the longer term. They have acquired a timeshare business in Scandinavia, and that seems to be in better shape. Financials are decent, but the stock hasn’t done much after that massive push post the IPO. Here’s a Weekly Chart:
There’s a conference call at 6:30pm if you want to attend.
Disclosure: No positions.