Opening of Ram temple in Ayodhya is a big event
Sonia Shenoy rightly pointed out that the big event to watch next month will be the opening of Ram temple in Ayodhya. Ayodhya is expected to see a huge tourism boom. In 2022, Varanasai, a popular piligrim spot, attracted 7.2 crore visitors which dwarfed the 85 lakh visitors snared by Goa. Sonia said that stocks like IHCL, Indigo and IRCTC would benefit from the tourit bonanza.
Avinash Gorakshakar referred to Praveg Limited which has already built a resort at Ayodhya and will start from the 15th Jan onwards. He said the Company’s Ayodhya resort is very near to the Ram mandir and that almost 75 per cent occupancy has been pre sold.
Pl keep a track on Praveg Limited
They have already built a resort at Ayodhya and will start from the 15th Jan onwards
Almost 75 per cent occupancy has been pre sold
Cos ayodhya resort is very near to the Ram mandir
Keep a watch guys https://t.co/FKU13ORrpU
— Avinash Gorakshakar (@AvinashGoraksha) December 24, 2023
Avinash Gorakshakar has also explained the merits of the stock in an earlier video on YouTube.
Praveg is a small-cap held by Sageone & Morgan Stanley
Praveg is a small-cap stock with a market capitalisation of Rs 1600 crore and a free float of Rs 625 crore. The promoters (PARASKUMAR MANEKLAL PATEL and family) hold 54.53% of the equity capital while the public holds 45.47%.
Amongst the public, SAGEONE- FLAGSHIP GROWTH 2 FUND which is founded by market Guru Samit Vartak holds 4,00,000 shares compromising 1.75% of the equity. Two FIIs, namely MORGAN STANLEY ASIA (SINGAPORE) PTE and IEGFL – MULTI OPPORTUNITY hold 2,54,410 and 3,06,996 shares respectively.
Praveg is a pioneer and leader in experiential luxury
Nuvama has issued a detailed report on Praveg in which the entire business model is explained in the following manner:
We recently interacted with PRAVEG’s management to gain a broad strategic overview of the business. Established in 2005, this pioneer and leader in experiential tourism in India offers exhibition, event management, and hospitality services in India. With a revenue contribution of 43% in the hospitality segment, it operates ~700 luxury tents and cottages across 10 properties in Gujarat, Daman, Diu, and Uttar Pradesh. These properties are in areas of cultural significance and heritage where traditional construction is unviable. By FY25-end, it plans to add ~300 keys across 10 resorts in five states and Union Territories. PRAVEG is also a strong player in event management (57% contribution to total revenue), given its expertise in creating large non-permanent structures in a very short timeframe. It has organised over 1,000/2,000 events/exhibitionstill date, mostly for the government. It recently forayed into wedding management. At the CMP, the stock trades at a trailing 12-month EV/EBITDA and P/E ratio of 40.1x and 74.5x,respectively. The stock is not rated.
Leader in the fast-growing experiential hospitality segment
i) History: PRAVEG is the pioneer in the non-permanent luxury accommodation segment in India. Its journey began in 2013 when it secured its first contract from Gujarat Tourism 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. Driven by the success of this model, the government floated tenders across states, with PRAVEG successfully securing contracts in Varanasi, Daman, and Diu in 2023.
ii) Contracts and bids: The lease contract term ranges from 10 years to 25 years and is typically renewed every five years. Once awarded, the contract tends to be renewed given the cost advantage to the existing player. In terms of competition, Lallooji & Sons is the only organised peer in Gujarat.
iii) Investment: Against an investment of ~INR1cr per room, PRAVEG’s luxury tents require just INR15–20lk to set up. Its semi-temporary cottages need an investment of ~INR30lk. Time to market is also extremely short as it has the capability to set up a tent city in just two months. Owing to limited capex, its luxury tents/cottages can break even in the first year itself, at an occupancy level as low as 20%/40%.
iv) Inventory: PRAVEG operates 10 properties (PPP/owned: eight/two) across Gujarat, Daman & Diu, and Uttar Pradesh, with an inventory of 685 keys. These include 446 luxury tents/163 cottages/76 luxury hotel rooms across four/five/one property. Of this, 416 were operational as of March, with the rest to be commissioned over April November. Average occupancy stands at 60–65%. Its existing properties at the Rann of Kutch/Statue of Unity (high seasonality) operate at 69%/48% occupancy and an ARR of INR9,880/INR8,353. Its new properties at Daman/Diu operate at 60%/50%, with an ARR of ~INR7,300/~INR7,500. The management expects peak occupancy of 75%.
v) Future expansion plans: By FY24-end, it plans to add 52 keys at three properties. In FY25, it will add another ~250 rooms across eight properties, taking the total inventory to ~1,000 (refer Exhibits 1 and 2). Four properties will be wholly owned (three in Rajasthan, one in Velavadar) while others will be under PPP with the respective state governments under a fixed lease model. Considering average occupancy of 50%, ARR of INR9,000 and an EBITDA margin of 40% (management guidance), PRAVEG can generate a revenue/EBITDA of ~INR160cr/INR65cr from the hospitality segment in FY25 (FY23 revenue/EBIT: INR37cr/INR12cr). By FY29-end, it is targeting ~2,500 rooms (revenue potential – ~INR450cr). Average capex per room is estimated at INR25lk.