The Hindu Business Line : Recent cues to Mahindra Holidays value

Mahindra Holidays & Resorts has made a pre-IPO placement amounting to one per cent of its capital to NYLIM Jacob Ballas India Fund, for a consideration of $10.06 million. This translates into a purchase price of approximately Rs 515 per share.

IPO pricing

Last week, the company finalised a 2 per cent private placement of equity stake to SBI at an approximate value of Rs 510 per share. Going by recent trends in IPO pricing, the price band of the initial public offer of Mahindra Holidays is likely to be close to the pre-IPO price range.

At Rs 515 a share, Mahindra Holidays will be valued at about Rs 4,245 crore, on a post offer equity base.

The availability of a valuation benchmark for Mahindra Holidays would have implications for the stock of automotive major Mahindra & Mahindra.

The stock has in recent weeks run up on the impending IPO and listing of its subsidiary. If you take the pre-IPO placement as an indicator on valuation, the value of M&M’s stake (post-IPO) in Mahindra Holidays works out to Rs 3,567 crore or about Rs 145 per share.

Overall valuations

This is 20-25 per cent higher than initial market estimates.

However, this may not work out to a significant proportion of overall valuations for M&M and thus may not entail any significant upward revision in the latter’s value.

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