A fleet of Q2 results were announced in the past couple of weeks, and, furthermore, having a positive outlook, a wide range of Brokerages have come up with attractive target prices for a lot of stocks. 

Listed below is one stock under the ‘micro-cap’ category in which Nuvama securities see a huge upside of approximately 70 percent: 

Royal Orchid Hotels Limited 

With a market capitalization of Rs 802.19 crores, the stocks of Royal Orchid Hotels Limited opened their trading hour on Monday at Rs 289.95 and currently trades at Rs 292.50, gaining around 1.60 percent compared to the previous closing levels of Rs 287.95 apiece. 

During the past couple of financial years, the company’s financial performance has been back on track with an increase in the prime business indicators such as operating revenues and after-tax profits. 

The operating revenues went up from Rs 138.52 crores during FY21-22 to Rs 263.55 crores during FY22-23, and, the after-tax profits, during the same period, moved up from Rs 26.78 crores to Rs 46.94 crores. 

As a result of the above, the basic profitability ratios of the company increased with the return on equity (RoE) moving up from 20.19 percent during FY21-22 to 31.49 percent during FY22-23, and, the return on capital employed (RoCE), in congruence, shifting up from 20.53 percent to 35.13 percent. 

The company also reduced its debt-to-equity ratio from 0.64 times during FY21-22 to 0.44 times during FY22-23. 

Nuvama securities gave a ‘Buy’ tag to the company’s stock with a target price of Rs 498 indicating a potential upside of 70 percent as compared to the stock price levels prevailing in the market. 

The rationale behind providing such a recommendation pertains to revenue growth due to an aggressive room addition pipeline, higher EBITDA levels, deleveraging activities, etc. 

The latest shareholding pattern data of the company, as per the September 2023 quarter, showcases the Promoters holding a 63.6 percent stake, and the Foreign Institutional Investors (FIIs) holding a 4.18 percent stake in the company. 

Royal Orchid Hotels Limited is a company based in India that is involved in the business of providing accommodation and food service activities including hotels, resorts, restaurants, etc. It operates hotels in different parts of the country including Ahmedabad, Bangalore, Chennai, Jaipur, Kolkata, and many others.

Written by Amit Madnani 


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