- Competition risk- I don’t think that’s a big factor right now. First, Praveg is at the lower end of the market, their daily prices are between 8-12 k per night. Second, the market is highly underpenetrated. The hotel/ tent prices are very high in India compared to rest of the world due to lack of supply.
- Cyclicality: The best thing about Praveg is their cost model. They didn’t post any loss even during Covid. It speaks a lot about their cost model. If a hotel company can post profit during covid, then that company knows its business.
- Other risks- The company is diversifying its business very fast. They have gone into Rajasthan (run by a different political party) and are going into other states as well.
The good part is that they are clear that they don’t want to go into cities and invest huge amount on building assets. They are playing into this niche travel market and are not taking any debt. Until the promoters try something funny, this business model should work.
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