Praveg: In the dynamic realm of Indian small-cap stocks, Praveg Limited has caught the eye of the market. Originating in event management in 1992, this Ahmedabad-based company has astounded investors with an astonishing 54,000% stock return in just five years. This article peels back the layers of Praveg Limited’s success, exploring its diverse business, financial performance, growth catalysts, plans, and the challenges that accompany the company.

The company has a diverse clientele. They receive orders from the Government sector from companies like Bharat Petroleum, Sail, Gail, Indian Oil Corporation Limited as well as some from the private sector from companies like Reliance Industries, Adani, Tata Power, Wipro etc. 

Diverse Business Landscape

Commencing its journey in event management, Praveg Limited has strategically diversified its business into these key segments:

Exhibition & Event Management 

The company’s core expertise lies in organizing exhibitions, conferences, and product launches, catering to both corporate and government clients. Praveg has organized and managed exhibitions, events and campaigns in India and abroad. The Company has designed, executed, and managed more than 1000 major events and 2000 exhibitions all over the world.

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Tourism & Hospitality

Recognizing the potential of India’s expanding tourism sector, Praveg has established luxury tent cities and resorts in renowned destinations like Ayodhya and Rann of Kutch, offering unique and immersive experiences.

SegmentFY21FY22FY23
Exhibition & Event Management₹28.98 (68.38%)₹16.29(39.64%)₹48.61(57.35%)
Tourism & Hospitality₹13.40(31.62%)24.80(60.36%)₹36.14(42.65%)
Values in Cr

This diversification has not only mitigated risks but has also positioned Praveg for multifaceted growth. Let’s try to understand what are the possible reasons for the recent surge in the company’s stock price.

Factors Driving Stock Growth

Praveg’s stock surge can be attributed to several factors:

Rising growth in the tourism sector

The government’s provisional estimates reveal a remarkable resurgence in India’s tourism sector, with foreign exchange earnings experiencing a staggering 107% increase. In 2022, earnings soared from ₹65,070 crore to ₹1,34,543 crore, indicating a substantial rebound for the industry (as reported by ANI).

Recent Big Orders of the Company

The Company received an order on December 19, 2023, from the Department of Tourism, U.T. Administration of Lakshadweep for the Development, Operation, Maintenance, and Management of at least 50 tents at Agatti Island, UT of Lakshadweep. 

Similar to this, the company also received an order on December 23, 2023, from the Department of Tourism, U.T. Administration of Dadra & Nagar Haveli and Daman & Diu for the development, maintenance, and management of Jalandhar House, Diu on a license basis. 

In addition to this, the company revealed the signing of its inaugural project in Dholavira, Kutch, aimed at constructing eco-tourism cottages. Anticipated to become operational later this year, this venture reflects the company’s commitment to sustainable tourism and further expansion in the hospitality sector.

Ayodhya project

The stock has witnessed a significant surge of over 70 percent in the past month, attributed to the Pran Pratishtha ceremony. Notably, the company has played a pivotal role in constructing two tent cities in Ayodhya, with one situated near Ram Janmabhoomi and the other along the banks of the Saryu River. Commencing tent bookings in November of the previous year, the company offers a range of accommodations, starting at Rs 8000 per night. 

These are some of the factors, coupled with positive market sentiment, that have propelled Praveg’s stock and also the company to unprecedented heights. 

Financials

A closer look at Praveg’s financials is essential to understand what the numbers tell us about the company. The Company achieved  Revenue of Rs 84.86 crore, a rise of 87.36% as compared to the previous year of Rs 45.29 crore. The Profit after Tax stood at Rs 28.38 crore as compared to Rs 12.3 crore in FY22, a whopping rise of 132.09%

Company’s debt-to-equity ratio stands at zero for FY23 as compared to 0.12 in FY22. A change of a total of 94.75% YoY. This change was mainly because of the increase in equity base on account of money received on issue of equity shares on preferential basis.

Future Outlook

  • Crisil, a leading rating agency, projects a positive outlook for top hotel firms in 2024. The occupancy rates for these firms, boasting a collective inventory of 70,000 rooms, are anticipated to experience a year-on-year increase of 10%, reaching 74%. This projection reflects a promising trend in the hotel industry, indicating a potential upswing in demand and occupancy levels.
  • The company aims for robust growth, particularly in domestic demand throughout FY 2023-24, with the potential for increased international travel demand. India’s G20 Presidency and events like the ICC Men’s World Cup are expected to boost accommodation demand in host cities.
  • The company aspires not only to optimize market share but also to enhance profitability in the vibrant Indian hospitality sector. With a strategic position and a commitment to excellence, Praveg aims to realize untapped potential and achieve significant success.  By 2025, the company plans to establish more than 1,000 rooms across 25 plus resort locations offering exceptional hospitality experience. 
  • Praveg is set to make its mark in the news genre by launching a Gujarati News Channel, expanding its reach and influence in the media landscape. Furthermore, Praveg has exciting projects in the pipeline for various locations, including Dholavira, Velavdar, Ahmedabad, Udaipur, Jawai, Ranthambore, and more.
  • Praveg is actively pursuing 8 under-construction and 3 planned hospitality projects and the company also aims to establish a Resort and Theme Destination in Adalaj, Gujarat, in collaboration with the Tourism Corporation of Gujarat Limited.

Risks and Challenges faced by the company

While Praveg Limited’s stock surge and the financials of the company paints a dazzling picture, it’s crucial to remember that such dramatic growth often comes with its own set of shadows.

Market Volatility

Small-cap stocks like Praveg are inherently volatile, meaning their prices can swing wildly in response to market fluctuations. The current surge could be followed by a sharp correction, leaving investors exposed to significant losses.

Industry Competition

Praveg faces competition from established players in each of its segments – exhibition and event management, tourism and hospitality, publications, and even potential ventures into new areas like renewable energy. Standing out and maintaining market share will require constant innovation and differentiation.

Tourism Dependence 

A significant portion of Praveg’s current success hinges on India’s tourism boom. Any unforeseen events affecting tourism, like economic downturns or geopolitical instability, could have a drastic impact on the company’s revenue and profitability.

Limited Analyst Coverage

Due to its small-cap status, Praveg receives limited coverage from financial analysts. This lack of independent scrutiny could pose a risk for investors relying solely on company-provided information.

Conclusion

The recent stock growth and the promising financials of the company are attributed to a booming tourism sector, significant orders, and notable projects like setting up tents at Lakshadweep and Ayodhya. 

While the company boasts impressive financials, potential investors should be cautious due to inherent risks like market volatility, industry competition, and tourism dependence. Praveg envisions a promising future, aiming for robust growth and seizing opportunities in India’s evolving hospitality sector. However, the potential risks underline the importance of careful consideration.

Written by Akshita Maloo

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