seems great
thanks a lot
seems great
thanks a lot
Verlinvest was a Private Equity which needs exit and IPO is exactly done for that. Moreover Sula is selling an aspiration, dream and experience and this will always command a premium.
Apart from Verlinvest, as in the image others have only increased while the share price was falling.
It depends on how you look at it, a alcoholic beveraage or a hospitality company. Moreover their business is all about strong value chain and distribution.
IMO, it may not give returns in the near term and consolidate longer but it has margin of safety much like Sona BLW.
Good luck and Happy Investing
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.
Alike Neuland Labs, Justdial ltd. also doesn’t look like to be in a Long Term Bull run mode. I guess this too has finished its monthly 5th wave and will now correct given the divergence. The key is whether the price and MACD both break-out of the All time high zone. then that will become a good entry point into the stock.
Disclaimer - This is just a study, I could be wrong, I am just expressing my technical views for long term timeframe with monthly candle stick pattern.
Sorry @hitesh2710 bhai if I have crossed my limits!
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
Anubhav,
The promoter’s dilution is Institution’s accumulation which perhaps testifies the faith in the company and the category. I’m worried of the increase in number of shareholders (2,10,000). If some point in time stock starts appreciating in non linear manner, it may increase to 400,000 or may be more. In such case the future return may suppress since Public sharholding is still more than Promoter and the Institutions.
Disc- Not invested but closely watching.
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.
Business Details:
About the company: It started in 1997 as an engineering company, manufacturing equipment for the milk and dairy industry and around 2006-07, it got an opportunity to work on a product called the Bulb Bar for naval ships for defence.
Manufacturing plants:
Product:
One of the prime products is steel bulb bars. Steel bulb bars are profiles, that are used as stiffeners for the hull construction of warships, and naval ships. These are used for the frame members to support the main structure.
The key feature of the bulb bar is that the strength-to-weight ratio is about 3 times, because of its unique shape. Because of the strength-to-weight ratio being 3 times, one can reduce the weight of the final ship, which means that one can take in more ammunition, be more personal, & most importantly reduce the weight.
special steel, ballast bricks, which are used for naval critical platforms. These are used for balancing. The key feature of this particular product is the magnetic permeability of this is near zero, making it very, very difficult to detect on any radar or something.
Heavy Vehicle Factory Steel Profile: These are special profiles which are used for the manufacture of the T-90 tanks by one of the ordnance factories. And before our development, these were all being imported from Russia. We’ve successfully been able to indigenize and execute for the same.
Welding wire and the welding electrodes: These are again complex chemistries containing special metals like nickel, titanium, nitrogen, and so on. These are used for very high tensile environments used for welding plates which are used for critical platforms, again, of the navy. This also was a product that was being imported from Russia, which we’ve successfully been able to indigenize and are supplying the same as of now.
‘Bukhari’: It’s a room heating device and it has developed this product in joint development with DIPAS, the DRDO lab, which is the Defence Institute of Physiology & Allied Sciences. So, they developed products for high altitude, which are to be used by our army men at minus 20 in Ladakh, Siachen, and so on.
Diary business products:
Product breakup for Fy25:
Orders: It stands above 230 cr having bulk of orders for Bulb bars & expects additional orders in this financial year.
Bukhari product: It has bagged an order about close to ₹64 crores.
Specialized converters for radio frequency to optical Fibres: It has got the order from L&T for about close to 3 crores for the supply of the same
In-Development: trying to work on a particular ammunition called the Super Rapid Gun Mount, which is again used for a naval gun. This is a work in progress, things are moving, but slightly at a slower pace because it is still a design stage for us.
Clients:
No royalty to DRDO or BARC for supplying to Indian defence forces:
Order delivery Timeline: It varies from order to order. Some orders have been done in about six months. Some orders may be 18 months or 24 months also.
Capacity: With current capacity, it can do about close to 180-200 cr in terms of revenue. With brownfield expansion, it can be able to up to about 350-400 crores in terms of revenue.
Bulb bars: It can do 2,000 tons to 2,500 tons annually with our existing capacity and with the capacity expansion, we should be able to achieve several close to 4,000 tons.
Awards :
Growth:
It has got approval for the bulb bars for supply to post guard vessels that are there & also bagged an order related to that.
Manufacture of fire-resistant composite doors & hatches replacing existing steel doors and hatches in all naval ships. They have tied up with the Netherlands company & if we want to start to manufacture the same in collaboration with them as a joint venture, plans to replace all the hatches due to the corrosion & the heaviness properties of composite doors are much lighter, again, adding to a feature where you can reduce the weight of the ship.
They have an MoU with IIT Bombay, & developing a product for the army for combat, which is a spherical robot. We’ve done the prototype and, again and field trial to take through.
It has been approached by other wings of the defence forces for developing specialized well-consumables, which currently they are importing.
Started a new company in Bangalore to work on making specialized converters, which convert radio frequency to optical fibre and optical fibre to radio frequency. This would open up the company’s diversional fact to get the defence electronics front.
It has tied up with other company out of IIT Madras, which has developed an underwater ROV. So, they’ve synchronized with them to be able to use this product for the naval application as a service job to be able to do the hull thickness measurement, hull thickness and cleaning of the marine growth that happens on ships once they are at sea. This helps in reducing the dry dock time and increases the time that the ship can be at sea.
Growth guidance: Revised target from 30% to 35% to 40% yoy for the next three years.
EBITDA margin: It aspires to have a 20% margin against 15% as of now.
TAM:
Strategic Intent:
Competitive Advantages and Intensity:
Financials:
Disclaimer- invested, biased, DYODD.
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
PAT for FY 2024 was reported to be 107 crores and stock currently quotes at 50 p/e (way over Industry median).
But let’s try to predict what earnings could be in the future as it’s more important for stock price. (Disclaimer- calculations may not be very precise and I have ballparked a few numbers).
1- Management in the last concall, after a lot of prodding from the analysts, nodded towards a topline growth in the range of 15%. Management’s view is that milk consumption (70% of current topline) tracks country’s GDP growth and since milk is quite organized (40% of total country’s milk consumption), heritage’s top line growth in the best case scenario (growth in consumption and steady gain in market share) will not be more than lower double digit (say 10-12%).
2- Main trigger to topline growth will come from value added product (VAP) category where margins are higher and organized sector’s share is very low. Heritage is growing its VAP portfolio in 18-20% range and currently it accounts for some 30% of total revenue. Management seems to be confident about VAP reaching 40% of topline in next few years which will also improve EBITDA.
So combining above, I feel that weightage average growth in topline should be around 15% (in the best case scenario) doubling in 5 years.
As for EBITDA, a higher share of VAP in portfolio and some operating leverage could yield an EBITDA of 11-12% (historically it’s been in 5-7% range). So if Heritage were to reach a topline of 7000 crores say end of 2028, we’ll have an EBITDA in the range of 800-900 crores (again in the best case scenario).
Coming to PAT, it’s been 1-4% of topline historically. But at 11-2% EBITDA, it’s very likely that PAT grows to 6-7% of topline giving us 400-500 crores.
Taking your median P/E of 35, this translates into 1400-1700 of share price, implying a stock price CAGR of 15-20% for next 5 years.
Now if you were a pessimist like me, and projected a 15% CAGR from here onwards, it may not look exciting for a small caps stock, considering that growth prices in the best case scenario. But then 20% CAGR on the other end of the spectrum is quite satisfying (if not mouth watering).
So I think investors getting into Heritage food will have to be fully sold on company’s future growth prospects hoping for everything to play out perfectly without any hiccup which hinge on the management’s ability to:
1- Grow VAP to 40% of total revenue in next 5 years
2- Consistently grow market share in both milk and VAP category
3- Consistently pass increase in milk prices to consumers
If management could deliver on the above and Heritage traded at multiples above sector median (due to reasons such as a friendly state government or company’s recent foray into now BJP-ruled Odisha), one can make a very strong bull case for the stock. But it will be a P10 bull case. One should temper this scenario with analysis of potential downsides and then take a call accordingly.
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