Multibagger stock: Praveg turned ₹10,000 into ₹30 lakh in just 5 years

Investing in the stock market has long been recognised as a pathway to potential wealth creation. At the core of stock market investing lies the crucial principle of time. Recognising and retaining promising stocks over an extended period can unlock substantial returns.

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Praveg was one such stock in this regard that produced a whopping return in a very short period. From a trading price of just ₹2.45 apiece five years ago, the stock has seen a remarkable rise of 30104% to trade at the current level of ₹724.90.

If an investor invested ₹10,000 in the shares 5 years ago and remained invested until the present day, the wealth would have grown to a staggering ₹30 lakh.

What makes this achievement even more remarkable is the consistent annual performance of the stock. In every year since CY19, the stock has gained over 50%. Notably, in CY20 and CY21, the stock generated multi-bagger returns of 1086% and 210%, respectively. In CY22, it gained 79% and in the current year so far it is up by 152%. 

In the previous trading session, the stock touched a record high of ₹783.50 apiece after the company bagged two new work orders from the Department of Tourism, U.T. Administration of Dadra & Nagar Haveli and Daman & Diu. These orders are for the operation, maintenance, and management of Jalandhar House, Diu, and Damanganga Circuit House, Silvassa, on a licence basis.

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Leader in the fast-growing experiential hospitality segment

Praveg is the pioneer in the non-permanent luxury accommodation segment in India, and it is also a strong player in event management. It has recently forayed into wedding management.

The company secured its first contract from Gujarat Tourism in 2013 to develop a tent city in the Rann of Kutch for the Rann Utsav festival. In 2018, it bagged a tender to develop a similar tent city near the Statue of Unity.

Driven by the success of this model, the government floated tenders across states, with Praveg successfully securing contracts in Varanasi, Daman, and Diu in 2023. 

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Owing to limited capex, its luxury tents and cottages can break even in the first year itself, at an occupancy level as low as 20% and 40%, said domestic brokerage firm Nuvama Professional Clients Group.

In terms of its inventory, the brokerage said that the company operates in 10 properties spread across Gujarat, Daman & Diu, and Uttar Pradesh, boasting an inventory of 685 keys. This comprises 446 luxury tents, 163 cottages, and 76 luxury hotel rooms across four, five, and one property, respectively. 

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Future expansion plans

Looking forward, the company plans to add 52 keys at three properties by the end of FY24. In FY25, another 250 rooms will be added across eight properties, bringing the total inventory to 1,000.

Considering an average occupancy rate of 50%, an average room rate (ARR) of ₹9,000, and an EBITDA margin of 40%, the brokerage believes that the company has the potential to generate revenue and EBITDA of ₹160 crore and ₹65 crore, respectively, from the hospitality segment in FY25.

By the end of FY29, the company is targeting 2,500 rooms (with a revenue potential of approximately ₹450 crore). The average estimated capital expenditure per room is set at ₹25 lakh, as noted by the brokerage.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.