This Stock is Up 30,000% in the Last 5 Years. More Gains Ahead?

In a year rife with obstacles, 2023 stood as a ray of hope for the travel sector, despite soaring costs and increased expenses.

Tourists became a driving force, reshaping the global tourism scene. This resurgence breathed life into the hospitality industry.

Many companies witnessed a historic year, achieving their best results during the first two business quarters.

Of these companies, one stood out, with its stock price rising over 190% in the last year.

Over the last one month, shares of this media and hospitality company have risen more than 13% on the back of bright prospects.

The stock is also a multibagger having jumped over 300x since listing.

Take a look at how the company's stock price has performed.

If an investor had invested Rs 10,000 in the company's shares five years ago, it would have turned into a staggering Rs 30 lakh (Rs 3 m) today.

IThe stock is none other than Praveg Ltd.

The company is a pioneer in the non-permanent luxury accommodation segment in India and it is also a strong player in event management.

Praveg secured its first contract from Gujarat Tourism in 2013 to develop a tent city in the Rann of Kutch for the Rann Utsav festival.

In 2018, it bagged a tender to develop a similar tent city near the Statue of Unity.

Praveg shares have witnessed a significant surge off late. This surge is part of a larger upward trend that has been observed in the last five years, resulting in remarkable gains for the company.

So, what's driving the stock price?

Let's find out...

Order Book Rife with Multiple Large Orders

The recent surge in the company's stock price can be attributed to the multiple orders it has received in the last few months.

On 20 December 2023, Praveg recently bagged an order for the development, operation, maintenance, and management of at least 50 tents at Agatti Island, Lakshadweep.

The order involves building tents with cloak room, changing room, along with commercial activities like scuba diving, destination wedding, corporate functions, and many more facilities on the island.

The company also received a similar work order from the Department of Tourism, U.T. Administration of Dadra and Nagar Haveli and Daman-Diu for the development, operation, maintenance, and management of the Tent City at Nagoa Beach, Diu.

The three-year project, extendable by two years, is poised to enhance tourism offerings in the region. The resort will feature 37 luxury tents, a convention hall, a restaurant, a spa, a swimming pool, and more.

Besides this, the company announced it has signed its first project at Dholavira in Kutch to build eco-tourism cottages. The facility is expected to be operational later this year.

According to a press release, the project will house 30 premium cottages and a restaurant in its first phase. The company has earmarked additional areas for expansion, allowing an additional 30 more cottages.

With these orders, the company's revenues are expected to grow substantially in the coming quarters. Praveg currently has a substantial portfolio of 580 operational rooms spread across multiple states.

Robust Financials to Support Growth

Praveg's revenue has grown at a compounded annual growth rate of 390% in the last five years. The company's net profit has also followed suit, growing at a CAGR of 182%.

This has translated into strong return ratios for the company. The company's return on equity stands at a robust 43.1% while return on capital employed stands at 54.3% as of 31 March 2023.

Praveg also has no debt on its books, thanks to its asset light model.

The company's promoters hold a 55.01% stake in the company.

What Next?

According to rating agency Crisil, occupancy rates for top hotel firms, with an inventory of 70,000 rooms, are expected to rise by 10% YoY in 2024 to 74%. This projection is well above pre-covid levels of 66%.

Praveg is all set to take advantage of this demand.

The company is strategically investing in resorts and hotels that operate year-round to mitigate the impact of seasonal earnings fluctuations. It also plans to build a strong professional team to support growth.

It is exploring opportunities in other states, including Rajasthan and other strategic locations and plans to add another 250 rooms in FY25 across eight properties, bringing the total inventory to 1,000.

The company aims to have 50-60 resorts by 2028, with a focus on maintaining an asset-light model and expanding into new geographies.

By the end of FY29, the company is targeting 2,500 rooms (with a revenue potential of approximately Rs 4.5 bn). The average estimated capital expenditure per room is set at Rs 25 lakh.

It is also optimistic for the second half of FY24, fueled by strategic scaling of events and exhibition business and initiation of upcoming hospitality projects.

The company is focused on the growth trajectory of the exhibition and event management business, with efforts to achieve a good operating profit margin.

How Praveg Shares have Performed Recently

Praveg shares have risen by 12% in the last month. Over the last six months, the stock price is up more than 38%.

The stock has been a multibagger since it listed on the exchanges. It has risen 300x since 2017.

Praveg shares touched their 52-week high of Rs 783.5 on 26 December 2023 while they touched a 52-week low of Rs 240.05 on 30 December 2022.

The stock is trading at a price to earnings multiple of 85.1x and price to book multiple of 10.2x.

About Praveg

Praveg is an advertising company with its core competence in exhibition and event management.

The company is also engaged in providing services to the hospitality sector.

It regularly organizes exhibitions nationally and internationally and the portfolio includes projects in the USA, China, South Korea, Africa, Europe and, the Middle East.

The company has also organized many state events on a turnkey basis. In total, the company has organized over 700 events and exhibitions all over the world.

Since 2001, the company has been working towards promoting tourism by organizing various tourism events.

It has recently entered into the field of real estate where it plans to execute all the promotional and marketing activities related to real estate.

To know more about the company, check out Praveg fact sheet and quarterly results.

You can also compare it with its peers on our website.

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Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...