I don’t agree. You have to understand that current hotel industry managements and thought process has been around for years and not easy to change. Thus their business model will take time to evolve. Also with already so many assets in traditional hotel buildings, how they think about capital allocation at a scale in setting up structures like praveg. Praveg started with eco tourism and thus offers them to pick venues which are very differentiated and execute them very efficiently with lowest cost. Think margins and op leverage once their desired count of resorts are operational. Market is giving such high PE for this reason. By the time this moat gets impacted, Praveg would have scaled enough domestically and in international markets as well because they have first mover advantage. In regards to connection with politicians / government, I would think it is naive to take investment decision based on this half truth or totally false facts (false because they are not proven in public domain). Hypothetically even if they are connected, as investors our focus should be to compound in a stock with sound business model and should there be any political connection, I won’t mind if it benefits my investment. There has been enough talk about connections of Reliance and Adani, most long term investors have done well in these stocks
Refer all company announcement on allotment of equity shares after Dec 2023 (Q3) and try to estimate EPS on dilution basis for Q4 and FY2024.
Expecting correction in share prices as it should align with mean PE ratio
Some random points-
- Praveg is going to add approx 10 resorts/year going forward.
- From next year all the new resorts will be funded by internal accruals only.
- On average 10 crores is needed to setup a new resort.
- All the resort assets, guests, staff are covered under full insurance.
- They use fireproof material to build the tents and keep fire preventing measures in place for any fire eventuality.
(Noted these from a private interview on value educator yt channel).
Can the ppl in the know please provide details with regards to the latest plan of QIP. I think last time @Niraj_Punjkaran provided this valuable info. Can you also pls let us know the source of your info ? Can individual investors participate in preferrential alottment.
Thank you very much. If I follow the SEBI guidelines on pricing, the price of preferred and warrants must at least be 900 which means company is raising around 200 cr. Does anybody have a clue whether dilution of equity upto such an extent is justified ?
Looks like they were unable to make new resorts operational with available funds, as per last Q con call, they should have got about 8 resorts operational as compared to only 1 as per the announcement. Further there is no news on their international expansion. One comfort is that good funds have participated and goldman sachs bought decent chunk around 850. Let’see. Disc: Invested
Concall Notes
Detailed dscn on redn in Ebitda…mgt conveyed that most resorts became operational in Q3/Q4 so realisations are yet to pick up…logical reasoning.
Eulogia. Expect strong Q3/4 marriage season, booked 70%, monthly RR 1.5 Cr but anl potn is 35 Cr
Headcount. From 150 to 1000 now on payroll. Incr in emp expdr
Depreciation Policy. 5% residual value, 95% charged off over 10 years
Avg Occupancy . 45-50% in PFY
Active Resorts . Mar 23 - one resort, Mar 24 - 12 resorts, likey by Mar 25 - 22 Resorts
Lakshwadeep . 5 resorts (incl water and adventure activity, 386 rooms, marriage and events), likley to be op - Nov, Constr commenced, Jun -Jul no work on site
Guidance. 300 Cr rev expectation, EBITDA 40% plus
Misc .
With new acqn, addl rev stream in advt will open up
Properties are getting better ratings from TRIPADVISOR
Share holding . Promo Hldg - 45.77%; FII - 7.95%; DII- 4.88% total - 58.6%
Disclosure. No holding.
Updates:
- Update the sheet for month of May.
- Expenses likely to be high going forward as well coz of ramping up of Lakshadweep Resorts.
- We will have better understanding by Q3 on the potential profit it can generate.
Most of the resorts are seasonal and impacted by weather. Having asset heavy structure, more direct manpower will increase cost to the books, which is round the year cost!. Seasonal resort with outsourcing model is more cost competitive and have higher margin as it offset seasonality.
Rapid growth of tents, without evaluating much about cost and profit model and learning from the past operational tents about hits and misses will provide more inputs for future tents opening but it seems Praveg is going very rapdily by dilutig equity and drastical reduction in EPS
The kind of valuation Praveg is getting does not leave any margin of safety.