A company that returned 54,000% in 5 years

the one on the right: In the dynamic realm of Indian small caps, Praveg Limited has captured the market’s attention. The Ahmedabad-based company, which started out in the event management space in 1992, has surprised investors with a staggering 54,000% stock return in just five years. In this article, we peel back the layers of Praveg Limited’s success and explore the various business, financial performance, growth catalysts, plans and challenges that come with the company.

The company has a diverse clientele. They receive orders from the government sector from companies like Bharat Petroleum, Sail, Gail, Indian Oil Corporation Limited as well as from the private sector like Reliance Industries, Adani, Tata Power, Wipro, etc.

Diverse business environments

Starting its journey in the event management field, Praveg Limited has strategically diversified its business into the following key segments:

Exhibition and event management

The company’s core expertise is organizing exhibitions, conferences and product launch events for both corporate and government clients. Praveg has organized and managed exhibitions, events and campaigns in India and abroad. The company has designed, executed and managed more than 1000 major events and 2000 exhibitions worldwide.

Tourism and Accommodation

Recognizing the potential for expansion of India’s tourism sector, Praveg established luxury tent cities and resorts in popular destinations such as Ayodhya and Rann of Kutch, offering unique and immersive experiences.

This diversification not only mitigated risk but also positioned Praveg for diversified growth. Let’s understand why the company’s stock price has soared recently.

What drives stock growth

Praveg’s stock price surge can be attributed to several factors, including:

Growth in the tourism sector

The government’s provisional estimates show a remarkable revival of India’s tourism sector, with foreign exchange earnings rising by a whopping 107%. Revenues jumped from ₹65,070 crore to ₹1,34,543 crore in 2022, marking a significant rebound for the industry (ANI reports).

The company’s recent large-scale orders

The company was ordered by the Department of Tourism, Lakshadweep Administration, Utah on December 19, 2023 to develop, operate, maintain and manage at least 50 tents at Agathi Island, Lakshadweep, Utah.

Similarly, the company received orders on December 23, 2023 from the Ministry of Tourism, UT administration of Dadra & Nagar Haveli and Daman & Diu for development, maintenance and management of Jalandhar House, Diu on license basis. .

Apart from this, the company said it has signed its first project aimed at constructing an eco-tourism lodge at Dholavira in Kutch. The venture, expected to become operational later this year, reflects the company’s commitment to further expansion in the sustainable tourism and hospitality sectors.

Ayodhya Project

Thanks to the Pran Pratishtha event, the stock has surged more than 70% in the past month. In particular, the company played a pivotal role in building two tent cities in Ayodhya. One is near Ram Janmabhoomi and the other is located along the banks of the Saryu River. The company, which started taking bookings for tents in November of the previous year, offers a range of accommodations starting from Rs 8000 per night.

These, combined with positive market sentiment, are some of the factors that have pushed Praveg’s stock and company to unprecedented heights.

finance

To understand what the numbers say about the company, it’s essential to take a closer look at Praveg’s financials. The company achieved revenue of Rs 84.86 billion, up 87.36% from Rs 45.29 billion in the previous year. Profit after tax increased by a whopping 132.09 per cent to Rs 28.38 crore compared to Rs 12.3 crore in FY22.

The company’s debt-to-equity ratio is 0 in FY23 compared to 0.12 in FY22. This is a total change of 94.75% compared to the previous year. This change is primarily due to an increase in equity capital resulting from funds received through preferred stock issuance.

future prospects

• Leading rating agency Crisil has a positive outlook for the best hotel companies in 2024. Boasting a total of 70,000 rooms, the company’s occupancy rate is expected to increase 10% year-on-year to 74 rooms. %. This outlook reflects promising trends in the hotel industry, indicating a potential rise in demand and occupancy levels.
• The company is targeting robust growth in domestic demand, particularly during fiscal 2023-24, with international travel demand also likely to increase. Events such as India’s G20 presidency and the ICC Men’s World Cup are expected to increase demand for accommodation in host cities.
• The company aims to optimize market share as well as improve profitability in the vibrant Indian hotel industry segment. Through its strategic position and commitment to excellence, Praveg aims to realize untapped potential and achieve significant success. By 2025, the company plans to have more than 1,000 rooms in more than 25 resort locations offering an exceptional hospitality experience.
• Praveg plans to make a mark in the news genre by launching a Gujarati news channel, expanding its reach and influence in the media landscape. Praveg also has exciting projects in the pipeline for various locations including Dholavira, Velavdar, Ahmedabad, Udaipur, Jawai, Ranthambore, etc.
• Praveg is actively pursuing eight projects currently under construction and three planned hotel projects and the company aims to establish a resort and theme destination in Adalaj, Gujarat in collaboration with Tourism Corporation of Gujarat Limited.

Risks and challenges facing the company

While Praveg Limited’s stock price surge and the company’s financial health paint a dazzling picture, it’s important to remember that such dramatic growth often comes with a shadow.

market volatility

Small-cap stocks like Praveg are inherently volatile, meaning their prices can fluctuate significantly in response to market fluctuations. The current surge could lead to a sharp correction, which could result in significant losses for investors.

industry competition

Praveg faces competition from incumbents in each sector, including exhibition and event management, tourism and hospitality, publishing, and potential ventures into new areas such as renewable energy. Growing and maintaining market share requires continuous innovation and differentiation.

tourism dependence

Much of Praveg’s current success depends on India’s tourism boom. Unforeseen events affecting tourism, such as economic downturns or geopolitical instability, can have a significant impact on a company’s revenue and profitability.

Limited analyst coverage

Due to his small capital status, Praveg receives limited information from financial analysts. This lack of independent research can create risks for investors who rely solely on information provided by the company.

conclusion

The recent stock growth and the company’s promising financials can be attributed to a boom in the tourism sector, significant orders, and notable projects such as setting up tents in Lakshadweep and Ayodhya.

Although the company boasts impressive financials, potential investors should be cautious due to inherent risks, including market volatility, industry competition, and reliance on tourism. Praveg envisions a promising future aimed at achieving robust growth and seizing opportunities in India’s evolving hotel industry. However, the potential risks highlight the importance of careful consideration.

Written by Akshita Malu

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