Dear fellow investors,

I wanted to bring to your attention a concerning development regarding Prime Focus, a company we have been tracking. As you may recall, the company was supposed to raise funds through a rights issue a couple of months ago, but it appears that the process has been delayed or has not materialized as expected.

I would appreciate if anyone in the community has any updates or information regarding the status of this rights issue. Has the company provided any official communication or explanation for the delay? Are there any rumors or speculations circulating about the reasons behind this postponement?

seems great

thanks a lot

I am ultimately saying a similar thing as Institutions may not absorb the promoter selling beyond a point and retail are obviously following the herd mentality if the company is hyped in the media. Verlinvest has already sold out. DIIs are putting in money fueled by burgeoning monthly SIPs which makes them put in money where they can and hence I am not reading much into DIIs increased holding. If and when, the monthly SIPs decline, it will be an interesting scenario for me to see how DIIs cut stake in the narrative driven stocks.

Royal Orchid Hotels –

Q4 and FY 24 concall and results highlights –

Company’s portfolio –

107 Hotels and resorts @ 70+ locations. Total Room inventory @ 6215 rooms. Total restaurant count @ 175

Ownership wise inventory of rooms –

Owned / JV Hotel rooms @ 591 – no addition in FY 24

Leased Hotel rooms @ 1112, up 94 pc YoY

Managed / Franchise rooms @ 6520, up 23 pc YoY

FY 24 and Q4 occupancies and Avg Room rates –

Q4 data –

Occupancy for Owned, JV, Leased hotels @ 72 vs 77 pc YoY. Their ARR @ Rs 6024 vs 5657

Occupancy for Managed, Franchise Hotels @ 65 vs 63 pc YoY. Their ARR @ Rs 3982 vs 3833

FY 24 data –

Occupancy for Owned, JV, Licensed hotels @ 74 vs 77 pc YoY. Their ARR @ Rs 5673 vs 5370

Occupancy for Managed, Franchise hotels @ 60 vs 63 pc YoY. Their ARR @ Rs 4039 vs 3795

Hotel Room inventory breakdown – Segment wise –

5 Star rooms – 407 ( 268 owned, 139 in JV )

4 Star rooms – 2673 ( 130 owned, 396 leased, 2147 managed / franchise )

Service Apartments – 138 ( 67 leased, 71 managed / franchise )

Resorts / Heritage – 949 ( 54 JV, 142 leased, 753 managed / franchise )

3 star / Budget – 1759 ( 83 leased, 1676 managed / franchise )

Q4 outcomes –

Revenues – 83 vs 77 cr
EBITDA – 24 vs 26 cr
PAT – 17 vs 13 cr

FY 24 outcomes –

Revenues – 312 vs 279 cr

EBITDA – 95 vs 98 cr ( invested aggressively behind hiring talent / employees in FY 24 – due rapid ongoing expansion. This has led to margin compression in FY 24. This should normalise in FY 25,26. Also spent aggressively on refurbishment / maintenance of old hotels in FY 24 )

PAT – 50 vs 49 cr
RoCE @ 20 pc

**Breakup of FY 24 revenues – **

Segment Wise –

Room rent – 170 vs 155 cr
F&B – 114 vs 102 cr
Other services – 12 vs 10 cr
Franchise / Management fee – 30 vs 24 cr

Ownership Wise –

Revenues from owned hotels – 97 vs 88 cr
Revenues from JV hotels – 76 vs 81 cr
Revenues from Leased hotels – 121 vs 96 cr
Franchise / Management revenues – 30 vs 24 cr

In Q4, company acquired remaining 49 pc stake in IKON hospitality ( running a hotel at Mumbai Airport ) for 34 cr

Aim to add 1500 rooms under management / franchise model + 400 rooms under the lease model in FY 25

Aim to do 370-380 cr of topline in FY 25. Aim to grow EBITDA by 10-15 pc only for FY 25. Again, the aggressive expansions lined up for FY 25 may not allow a margin expansion. Margin expansion may only happen in FY 26

Slated to open a new 300 room 5 star hotel in Mumbai in the middle of FY 25. Company to pay yearly rental of 36 cr for this property ( fixed for next 5 yrs ). Likely to do a topline of 100 to 120 cr / yr. Full ramp up expected to happen in FY 26. Expecting to do an additional EBITDA of 15 -20 cr from this property from FY 26 onwards

Aim to grow ARRs by 5-6 pc in FY 25

Company to add 28 rooms in their flagship Bengaluru property

Post elections, Company expects the corporate demand to pick up in a big way

Post FY 25, company is likely to go slow wrt addition of more managed / franchise hotels. They ll take time to consolidate their gains and ensure better quality service and incorporate learnings for the company. Plus they have reached a descent scales wrt recipt of management fee @ > 30 cr / yr

The company’s management contracts are not fixed rate contracts. These r basically a percentage of revenue share and vary from property to property

Disc: holding, biased, not SEBI registered

As I remember that there is significant dip in revenue from 2027(around 20-25 %) and same can be checked in this year valuation report. I dropped my investment plan considering Indo Grid a better option for long run. Power Grid also doesn’t have much plans to monetise assets via PGInvit . Market already punished PG Invit from 130 to 95 levels and I may get interested if price drops to 80 levels.