Fundamental Analysis Of Praveg The travel market in India is projected to reach US$125 billion by FY27, and the event and exhibition market is expected to reach USD 7,550.05 million by 2027. A small-cap company in this sector has become a standout player, grabbing the market’s attention. Let’s delve into the story of Praveg Limited, a company that gave more than 37,000% return in just 5 years.

Fundamental Analysis Of Praveg

Company Overview

Praveg Limited Logo Image

Established in 2005, Praveg Limited has emerged as the leading exhibition management company with over 20 years of successful operations. Having orchestrated more than 3000 events and exhibitions in India and abroad, Praveg has become a service powerhouse with a diversified portfolio encompassing exhibition management, event management, tourism and hospitality, and publication.

With a rich experience spanning two decades, a robust client base exceeding 100, and an impressive track record of managing over 1,000 events and 2,000 exhibitions, Praveg has solidified its position in the industry. Noteworthy achievements include the management of 3 tent cities with 450+ rooms spread across 3 lakh sq m, selling over 83,000 rooms, and serving 4,20,000+ meals.

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Beyond its roots in advertising and event and exhibition management, Praveg has evolved into a pioneer in tourism and hospitality, offering comprehensive and innovative solutions. The company’s global footprint extends from the USA to China, South Korea, Africa, Europe, and the Middle East, making Praveg a key player in executing large-scale projects across the globe.

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Its client base includes GSPC, ICAI, Indian Oil, SAIL, NTPC, Gujrat Tourism, etc. from the government sector and Suzlon, Reliance, Adani, TATA Power, Wipro, Hitachi, etc. from the private sector.

Segment Analysis

Exhibition & Event Management

The exhibition and events industry is responsible for the organization and execution of gatherings, trade exhibitions, conferences, and expos. It serves as a forum for presenting products, services, and ideas while also encouraging networking, collaboration, and industry growth. Event management in this area entails coordinating logistics and guaranteeing smooth implementation, which contributes considerably to economic growth. 

Tourism & Hospitality

Tourism involves the movement of people for leisure, business, or other purposes, exploring new destinations and cultures. Hospitality, on the other hand, refers to the services and lodgings provided to guests while they travel, assuring their comfort and contentment. Together, these industries make a considerable contribution to the global economy by providing jobs, promoting cultural interchange, and improving the overall well-being of both passengers and local populations.

Segment Analysis Praveg Limited

Industry Overview

The Indian economy showed rapid growth in 2022, the second consecutive year of strong recovery following a deep economic contraction in 2020 due to the COVID-19 pandemic. The Indian economy has remained resilient despite the ongoing global headwinds caused by external factors like post-pandemic spillovers, supply chain disruptions due to the ongoing Russia-Ukraine conflict, and potential recessionary pressures facing developed economies.

Tourism & Hospitality

Tourism in India highlights the country’s amazing history, culture, and diverse experiences, bringing not just cultural richness but also important economic advantages. The growth of India’s middle class and the rise in disposable income have played a role in supporting both local travel within the country and trips abroad.

The travel market in India is projected to reach US$ 125 billion by FY27 from an estimated US$ 75 billion in FY20. The Indian airline travel market was estimated at ~US$ 20 billion and is projected to double in size by FY27 due to improving airport infrastructure and growing access to passports. The Indian hotel market, including domestic, inbound, and outbound, was estimated at ~US$ 32 billion in FY20 and is expected to reach ~US$ 52 billion by FY27, driven by the surging demand from travelers and sustained efforts of travel agents to boost the market.

Events & Exhibitions

Exhibitions and events play a crucial role in boosting the economy. As India continues to be one of the fastest-growing economies, government initiatives aimed at supporting businesses across various sectors are anticipated to enhance the demand for events and exhibitions in the country.

The Indian event and exhibition market was valued at USD 3,674.95 million in 2022, and it is expected to reach USD 7,550.05 million by 2027, registering a CAGR of 12.43% during the forecast period of 2022-2027

Fundamental Analysis Of Praveg – Financials

Revenue & Net Profit

The company’s financial statement indicates that revenue has increased by 86.7 percent from ₹45.25 crores to ₹84 crores from FY22 to FY23, respectively. On a 4-year CAGR basis, the company grew by 8.78 percent. This increase was mainly due to a substantial rebound in the tourism industry.

The net profits of the company have increased by 132 percent, from ₹12 crore in FY22 to ₹28 crore in FY23. On a 4-year CAGR basis, the company has grown by 74.79 percent.

This increase was on account of an increase in operating profit and a marginal reduction in administrative costs. The decrease in revenues in FY20 and FY21 was mainly due to the impact of COVID-19.

The table below exhibits the revenue and profits of Praveg Limited over the last 5 years.

Fiscal YearRevenue from operations (In Crores)Net Profit (In Crores)
202384.4828.43
202245.2512.24
202145.3210.74
202059.563.8
201960.122.76
4-year CAGR8.78%74.79%

Profit Margins

Praveg reported a 10 percent rise in operating profit margin (OPM) and a ~7 percent rise in net profit margin (NPM) from FY22 to FY23. The rise was consistent with the net profits. The margins have been trending upward and improved their 5-year average to 30.49 percent and 19.06 percent, respectively.

The margins improved significantly on account of a surge in demand and a decrease in operating costs for rent and travel expenses as compared to the previous year.

The table below exhibits the profit margins of Praveg over the last 5 years.

Fiscal YearOperating Profit Margin (%)Net Profit Margin (%)
202353.6233.65
202243.6627.05
202135.8323.7
202011.326.15
20198.024.77
5-year average30.4919.06

Return Ratios

As for its return ratio, Praveg’s business generates a healthy return on capital employed and equity. Its RoCE and RoE stood at a whopping 34.55% and 25.28%, respectively, in FY23.

The RoCE and RoE ratios have decreased even after the increase in profitability due to the increase in equity base on account of money received on the issue of equity shares on a preferential basis. On a longer perspective, the ratios have remained similar.  The ROE in FY19 was negative due to losses the company made, which turned the 5-year average negative.

The table below shows the ROE and RoCE of Praveg for the last 5 years:

Fiscal YearReturn on Capital Employed (%)Return on Equity (%)
202334.5525.28
202257.6744.35
202167.4556.35
202035.8824.58
201934.44-166.5
5-year average45.99-3.19

Leverage Ratios

Looking at the company’s leverage status, we can see that it maintained very low debt and is almost debt-free now. Over the last 5 years, the highest recorded debt-to-equity ratio was 0.12 in FY22.

This indicates that the company is less financially burdened because it relies less on borrowed capital to fund its operations and expansion. This also means that the company can retain more of its revenue because it has a small commitment to repay debt and interest.

In terms of interest, the company’s interest coverage ratio increased in FY23, which was reported at 65.62. This means the company has generated enough gross profits to cover its interest expenses 65 times over, which is mainly due to an improved marginal collection mechanism and efficient use of assets.

The table below shows the D/E and interest coverage ratio of Praveg for the last 5 years:

Fiscal YearDebt / Equity (Times)Interest Coverage Ratio (Times)
2023065.62
20220.1239.45
20210.0548.52
20200.0612.41
2019-2.1312.51

Key Metrics

ParticularsAmountParticularsAmount
CMP₹ 919.75Market Cap(Cr)₹ 2,011.83cr
EPS9.43Stock P/E128
RoE12.03%RoCE16.23%
Promoter Holdings62%FII Holdings3.01%
Debt to Equity0.01P/B15.2
Operating Profit Margin47.90%Net Profit Margin33.60%

Fundamental Analysis Of Praveg – Future Plans

  • By 2025, Praveg has the vision to create over 1,000 rooms across 25+ resort destinations, offering exceptional hospitality experiences around the globe.
  • Our sights are set on a wider horizon as we prepare to enrich our hospitality portfolio by creating our world-class resorts in Udaipur, Ranthambore, Jawai Dam, and Velavdar in the foreseeable future.
  • Capitalize the untapped potential across our established brand equity and diverse product portfolio
  • Praveg has eight under-construction and three under-planning hospitality projects.
  • It will carry forward its legacy of success by creating a niche in the news genre and commencing its journey as a Gujarati news channel.
  • Praveg has projects starting soon in Dholavira, Velavdar, Ahmedabad, Udaipur, Jawai, Ranthambore, and other locations 
  • The company was awarded a work order for the Development of a Tent City along Bramha Kund at Ayodhya, Uttar Pradesh
  • Plan to establish a resort and theme destination in Adalaj, Gujarat, collaborating with the Tourism Corporation of Gujarat Limited.

Conclusion

In the article “Fundamental Analysis of Praveg,” we have looked at their business, the industry in which it operates, its five-year financials, and its plans. The forthcoming period is set to witness robust growth primarily driven by domestic demand, and this momentum is projected to remain strong throughout FY 2023–24.

While international travel is in the process of recovering, there remains ample room for further demand escalation, creating a great deal of opportunities for future growth for the company. In addition to all this, further analysis is recommended before investing to understand the risk and return characteristics of this company.

What do you think about Praveg as an investment opportunity? Do let us know in the comments section below.

Written by Ashish Agarwal

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