A leading hospitality chain renowned for its luxury hotels and exceptional service across India is making strategic financial moves. The company’s board has approved a significant rights issue of Rs. 50 crore, aiming to reduce debt and strengthen business operations, signalling potential transformation in its financial structure.
Share Price Movement
The share price of Sayaji Hotels Limited hit an intraday high of 3.9 percent to Rs. 351 per share on Wednesday, an increase from its previous close of Rs. 337.9 per share. The market capitalisation now stands at approximately Rs. 593 crore as of January 15, 2025.
What driving price?
Sayaji Hotels has announced a rights issue where the board has approved fund raising of up to Rs. 50 crore.
A rights issue is a way for companies to raise capital by offering existing shareholders the opportunity to purchase additional shares at a discounted price. The company plans to use these funds to pay off debt and for general business purposes.
However, whether the company will become debt-free in the near future depends on their current debt levels, how much of the Rs. 50 crore they allocate to debt reduction, and their continued performance of being a profitable company.
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Financial Highlights
According to its recent filing, in the year ending March 2024, the company’s revenue for FY2024 was Rs. 112 crore, slightly down from Rs. 115 crore in FY2023, showing a minor decline of 2.6%. However, its profit for FY2024 stood at Rs. 14 crore, a decrease from Rs. 35 crore in FY2023, reflecting a 60% drop. Despite this, the company became profitable starting FY2022, marking a significant turnaround after previous losses.
The company’s debt decreased from Rs. 102 crore in FY2019 to Rs. 62 crore in FY2024, representing a 39% reduction over the five-year period. This decrease highlights the company’s efforts to lower its financial leverage and improve its balance sheet.
Competitors
Sayaji Hotels faces competition from top players like Sinclairs Hotels, which operates in the mid-market segment, and Kamat Hotels, a veteran offering diverse accommodations. ITC Hotels dominates the luxury market, while Byke Hospitality focuses on budget-friendly options.
Market Outlook
India’s travel and tourism sector is set for robust growth, driven by increasing demand for medical tourism, wellness retreats, and spiritual tourism. The market is projected to reach $125 billion by FY27, supported by government initiatives like the Swadesh Darshan Scheme and increased budget allocation.
Diverse cultural experiences, a growing network of airports, and extensive coastal attractions further strengthen India’s appeal. With a 7.1% annual GDP growth rate in travel and tourism, the country offers significant opportunities for global and domestic travellers.
Written By Fazal Ul Vahab C H
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