ADVANI HOTELS & RESORTS (INDIA) LTD

ADVANI HOTELS & RESORTS (INDIA) LTD

 (NSE CODE:  ADVANIHOTR, BSE CODE: 523269) (CMP: Rs.64.4)

Advani Hotels & Resorts (India) Ltd., is a public limited company incorporated in March 1987. The Company has been promoted by Mr. Sunder G. Advani and Mr. Haresh G. Advani. The promoters have been in the hotel industry for more than 35 years. 

Caravela Beach Resort is one of the finest luxury beach hotels in Goa. As one of the first few five star hotels in Goa, it enjoys the distinct and unparalleled advantage of proximity to the beach, high ceilings that are an architectural treat and vantage points that offer breath-taking views of the sea, sand and is in the midst of lush greenery around the property. These features result in Caravela Beach Resort offering the rare experience of secluded beauty and virginal beaches and environs whilst keeping you in touch with all the modern facilities.

Located on the serene white sands of Varca beach, the 200-room,  resort is sprawled over 24 acres of lush tropical lawns. Each of the hotel’s guest rooms, suites and villas have private balconies that overlook either the ocean, the landscaped gardens or the pool, one of Goa's largest. The hotel also features a 9-hole golf course and an Ayurveda Centre, differentiating it from other standard five-star resorts in Goa

INDUSTRY OVERVIEW

Hotels are an important component of the tourism industry as they contribute in the overall tourism experience through the standard of facilities and services offered by them, which has evolved over the last decade. The Indian hotel industry has seen a significant growth in room inventory across categories from upscale luxury to limited services and boutique and budget hotels. The occupancy has continued to grow from both domestic and international travelers in both the business and leisure segments. With the continued growth in India's GDP, rising per capita income and increased inspirational spending, the Indian hospitality sector is expected to grow much faster than most other countries. The Central and State Government have realized the importance of attracting affluent tourists, which will benefit the hotel.

Indian Economy

India’s projected GDP of well over 8% makes India the fastest growing economy in the world. The Services Sector constitutes about 58% of India’s GDP. This is good news for the hospitality industry. When GDP grows, there is an increase in disposable income and families can afford to spend on discretionary items, such as leisure. Corporates can also spend more on conferences, morale building get-togethers. Goa is the ideal location for all of these activities.

GOVERNMENT INITIATIVES

·        The Union Cabinet has approved the MoU between the Ministry of Tourism of India and the Ministry of Trade Industry and Tourism of Colombia to boost cooperation in the field of tourism between the two countries.

·        The Central Government has approved the MoU between India and Cambodia to promote bilateral tourism between the two countries.

·        Last year, the Ministry of Tourism sanctioned Rs.844.96 crore to the States and Union Territories (UTs) for developing tourism destinations and circuits, which include projects relating to Product/Infrastructure Development for Destinations and Circuits (PIDDC), Human Resource Development (HRD), Fairs and Festivals and Rural Tourism.

·        The Heritage City Development and Augmentation Yojana (HRIDAY) programme, approved by HRIDAY National Empowered Committee, is aimed at eight mission cities including Varanasi, Mathura, Ajmer, Dwaraka, Badami, Vellankini, Warangal and Amaravati for a total cost of Rs.431 crore.

·        The Government of India (GoI) plans to cover 150 countries under the e-visa scheme by the end of the year besides opening another airport in the NCR region.

·        Under ‘Project Mausam’, the GoI has proposed to establish cross cultural linkages to revive historic maritime cultural and economic ties with 39 Indian Ocean countries.

TRIGGERS

• Available at PE of 33.76 while industry PE is 60.49

• Promoters hold 50% and Delta Corp holds 35% in the company

• DMart Promotor Radhakrisan Damani, who is known for investing in companies which eventually become multibaggers, also holds a big chunk in the company

• Enterprise Value many times more than Market Cap + Debt, cheapest compared to peers

• Net profit increasing year on year and is virtually Debt Free

• Big Beneficiary of GST as GST Council decided that 18% Tax will be levied for room rent of Rs 2500- Rs 7500 as most of its rooms fall under this category.

• GST on restaurants also reduced from 28% to 18%, so golden era has started for the company.

• Company has over 100,000 square feet FSI available for their hotel to undertake any expansion, such as a, additional rooms, a villa development, sangeet hall, new spa etc, which could yield additional revenue streams for the existing hotel unit.

• Company works on strong margins of 40% and generate good cashflows

FINANCIAL OUTLOOK

The equity capital of the company is Rs.9.24 crore and has reserves of around Rs.28.49 crore, the Debt on the company is very negligible just 4 crore and is expected to be Debt free this quater.  The promoters hold 50.17% of the equity capital, 35.45 % is held by Delta Corp which is very famous for running casinos in GOA, and ace investor Rakesh Jhunjhunwala holds big chunk in DELTA CORP. DMart Promotor Radhakrisan Damani, who is known for investing in companies which eventually become multibaggers, also holds a big chunk in this hotel.

During FY17, Advani Hotels posted sales of Rs.59.64 crore with PAT of Rs.8.79 cr compared to PAT of 6.40 crore in FY16. Company has posted EPS of Rs 1.9  in FY17 compared to EPS of 1.39 in FY16. It is a regular dividend paying company and has paid a dividend of 40% for FY17. Currently, the stock trades at a P/E of 33.76 while the industry PE is 60.49. It is available very cheap compared to peers. Expected EPS for FY18 is Rs. 3.5, so it is available at forward PE of just 18. This stock is not participated recent stock market bull rally, so its a Re-Rating candidate. 

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