This Small Cap Hospitality Stock Skyrockets 607.92% In 3-Years, Can Grow By 62%, Says Nuvama

Nuvama Wealth and Investment, one of the prominent stockbroking firms, sees that Royal Orchid Hotels stock can rise by nearly 62%. It has soared by 607.92% over three years.

Royal Orchid Hotels is a small-cap company incorporated in 1986. The company operates in the tourism & hospitality sector and has a market capitalisation of Rs 895.02 crores. The company posted a strong fourth-quarter performance and its future occupancy revenue would continue to be strong the brokerage house believes.

Q4 Performance

Royal Orchid Hotels' revenue grew by 84% YoY to Rs 73 crores in Q4FY23, led by healthy room additions and strong RevPAR. It notched an ARR of Rs 5,657 (JLO rooms) in Q4FY23 (up 40% YoY, but down 4% QoQ), with an occupancy of 77% (Q3FY23/Q4FY22: 76%/62%).

EBITDA grew 219% YoY to Rs 22 crores on operating leverage benefits, with the margin improving to 30% from 17% in Q4FY22. PAT grew 123% YoY to Rs 13cr. EBITDA/PAT fell 8%/9% QoQ on a higher base and marginally lower ARR.

Nuvama's View & Valuation

Nuvama suggests that to capitalise on favourable industry dynamics, Royal Orchid Hotels added 418 rooms in FY23 (344/74 via management contracts/revenue sharing leases). It is expected that additional ~1,000 rooms over FY24 (501 added since April 1) will be added.

"With strong occupancy and ARR on constrained supply additions, we expect the growth momentum to continue. With healthy growth in profitability and working capital efficiency, the Balance Sheet will continue to strengthen." the stock broking firm says.

Further, it added, "Over FY23-25, we expect revenue/EBITDA/PAT to clock 29%/23%/32% CAGR. We roll over our valuation to FY25 and maintain 'BUY' with a target price of Rs 549, based on 12x FY25E EV/EBITDA."

Stock Price Movement

The latest closing price of Roya Orchid Hotels has fallen by 3.55% to Rs 326.35 per share on an intraday basis. In the last one year, the share price has massively surged by 149.31%, and over three years it has skyrocketed by 607.92%.

Disclaimer

The stock has been picked up from the brokerage report of Nuvama Wealth and Investment Limited. Greynium Information Technologies, the author, or the brokerage firm will not be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.