Multibagger penny stock: Praveg, the country's leading eco-responsible luxury resorts company, has delivered a stellar performance on Dalal Street in recent years. Despite the stock seeing a significant correction from its recent peak, it is still trading with impressive gains.
From a trading price of just ₹2.35 apiece five years ago, the stock has seen a remarkable rise of 29,814%, to now trade at ₹703. If an investor had invested ₹1 lakh in the shares five years ago and remained invested until today, their wealth would have grown to a staggering ₹3 crore, highlighting the potential of the stock market to multiply wealth when the right investments are made.
What makes this achievement even more remarkable is the consistent annual performance of the stock. In CY19, the stock gained over 50%. Notably, in CY20 and CY21, the stock generated multibagger returns of 1,086% and 210%, respectively. In CY22, it gained another 79%, and the rally extended into CY23 with another massive gain of 166.70%.
However, the stock witnessed profit booking in CY24, ending the year with a drop of 1%. At current levels, it is trading at a 46% discount from its all-time high of ₹1,300, which it attained in January 2024.
From its October 2024 low of ₹641.50, the stock has regained some strength and is now trading 10% higher than that level. Meanwhile, looking at the broader picture, the stellar rally in the stock can be attributed to the company's business model, which uses an asset-light approach that revolutionises the hospitality sector.
With its unique business model, Praveg is emerging as a key player in the hospitality sector with a cost-efficient model, positioning it to outperform its hotel industry peers, as per the market experts.
Praveg is a leading player in India’s non-permanent luxury accommodation segment and has established itself as a strong contender in the event management industry. The company has also ventured into the wedding management business.
Initially renowned for organising marquee events like the White Rann Festival and Vibrant Gujarat, Praveg expanded into the hospitality sector in 2015, focusing on creating experiential staycation options in culturally rich and environmentally unique locations.
The company stands out by utilising non-permanent structures, such as luxury tents, to access areas of significant cultural and natural importance. Its innovative model involves using luxury tents and eco-friendly cottages, which drastically reduce construction costs to ₹1.5–2 million per tent compared to ₹12.5–15 million for a traditional hotel room in metro areas, as per the analysts.
This cost advantage extends to seasonal properties, where setup costs are minimized as the structures are reusable. Unlike traditional hotels that require extensive civil work, Praveg’s tents can be set up in just two months and dismantled or relocated when leases expire, making the model highly flexible and cost-efficient.
This efficient cost structure positions Praveg as a competitive and adaptable player in the luxury hospitality market. Praveg resorts are strategically located in culturally and historically significant areas and places of exotic natural beauty.
The company's strategy focuses on experiential hospitality and spiritual tourism locations, which are typically government-owned and inaccessible for private purchase. Meanwhile, the high-quality tents and premium experiences offered by Praveg result in strong occupancy rates, robust pre-sales at luxury hotel rates, and exceptional returns on capital due to their non-permanent nature.
The company has recently announced the launch of its luxury resort operations on Bangaram Island, Lakshadweep, starting January 18, 2025. Lakshadweep has seen an unprecedented surge in tourism, with the number of visitors doubling over the past year.
The company expects Bangaram Island Resort to achieve an occupancy rate of 50–60%, reflecting the growing demand for sustainable luxury accommodations. This marks the company’s 16th property, as per the company's recent regulatory filing.
With an ambitious pipeline of new projects underway, Praveg is set to significantly expand its footprint across some of India’s most sought-after destinations.
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.
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