Praveg Limited (531637) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Praveg Limited Q2 FY '25 Results Conference Call hosted by Kirin Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Chandni from Kirin Advisors. Thank you, and over to you, ma'am.

Thank you. On behalf of Kirin Advisors, I welcome you all to the conference call of Praveg Limited. From management team, we have Mr. Vishnu Patel, Chairman; Ms. Bijal Parikh, Finance Director. Now I hand over the call to Ms. Bijal. Over to you, ma'am.

Good afternoon, everyone. I welcome you all to the conference call for Praveg Limited. Before we get into the specifics of company's performance for Q2 financial year '25, I would like to provide a quick overview of the company. We are pioneers in the field of eco-responsible luxury hospitality, blending unique travel experiences with sustainability. Our resorts are strategically located in culturally and naturally significant areas, promoting tourism while preserving local ecosystem. Our signature luxury tented accommodations offer exclusivity and minimal environmental impact, catering to travelers seeking premium experiences in the pristine location. These nonpermanent structures allow operations in ecologically sensitive areas, balancing luxury with responsibility. Beyond hospitality, Praveg excels in the event sector, recently expanding into the high-growth weddings and banquet market. By offering premium values for destination weddings, we are unlocking significant growth opportunities. Now, let's move on to Q2 financial year '25, where Praveg has made notable progress. One of the most significant of this quarter has been our strategic acquisition of a 51% stake in Abhik Advertisement Private Limited and Bidhan Advertising and Marketing Private Limited. This acquisition was completed in multiple tranches through the purchase of equity shares and the issuance of preferential equity shares. As a result, both companies are now subsidiaries of Praveg. This acquisition strengthens our foothold in the advertising and marketing sector, allowing us to further expand our portfolio and enhance our marketing capabilities, which will benefit not only our existing business but also enable us to explore new verticals and customer segments. Another significant development has been the securing of a major contract with The Tourism Corporation of Gujarat Limited. This 5-year agreement will see Praveg managing 30 bhungas, which are traditional mud huts native to the Kutch region, located in Dhordo, Gujarat. These bhungas are an iconic representation of Gujarat's rich cultural heritage and eco-friendly architecture practices. By managing these bhungas, we are offering travelers an immersive cultural experience while contributing to the preservation of local traditions. Looking forward, Praveg is exceptionally well positioned to capitalize the rapid growth of India's hospitality industry. The sector is expected to expand significantly with projections showing that market will grow from USD 24.61 billion in 2024 to USD 31.01 billion by 2029. This growth is driven by factors such as rising disposable income, increased domestic and international travel and demand for more personalized and premium experiences. Praveg's unique propositions of luxury tent resorts located in culturally and ecologically significant areas align perfectly with this strength. As travelers take more experiential and meaningful vacations, especially in Tier 1 and Tier 3 cities, we are confident that our eco-friendly and sustainable approach will resonate with this expanding market. On the financial front, I am pleased to report for half-yearly first half of financial year '25 on a consolidated basis. Our total income grew significantly to INR 60.26 crores compared to INR 27.08 crores in first half of financial year '24, with EBITDA rising to INR 18.21 crores from INR 9.41 crores in the same period last year. Net profit stood at INR 2.17 crores against INR 3.26 crores in first half financial year '24, and our EPS was INR 0.85 compared to INR 1.51 in H1 financial year '24. On a standalone basis, total income increased INR 52.49 crores up from INR 27.08 crores in H1 financial year '20, while EBITDA reached to INR 16.29 crores against INR 9.42 crores in the previous year. standalone net profit was INR 2.19 crores compared to INR 3.27 crores in H1 financial year '24, with an EPS of INR 0.55 versus INR 0.97 in the corresponding period last year. For Q2 financial year '25, on a consolidated basis, total income rose to INR 35.58 crores compared to INR 14.64 crores in Q2 financial year '24, with EBITDA improving to INR 10.58 crores from INR 4.47 crores. Net profit stood at INR 1.40 crores against INR 2.10 crore in Q2 financial year '24, and EPS was INR 0.55 compared to INR 0.97 in Q2 financial year '24. On a standalone basis, total income increased to INR 27.81 crores from INR 14.64 crores in Q2 financial year '24 while EBITDA rose to INR 8.66 crores against INR 4.48 crores in the prior year. standalone net profit stood at INR 1.43 crores compared to INR 2.10 crores in Q2 financial year '24, with an EPS of INR 0.55 against INR 0.97 in the corresponding quarter last year. Looking ahead, our vision remains focused on Vision 2028, where we aim to expand to over 50 resort locations and operate more than 2,000 rooms. As of now, we have over 680 rooms, and we plan to add more 1,500 through our upcoming projects, many of which are either under construction or in the planning phase. We believe that evaluating the company's performance on an annual basis provides a more comprehensive and accurate perspective on our operations, allowing for a true and fair assessment of our strategic progress and overall performance. In line with this approach, we have decided to transition to holding earnings calls on a half-yearly basis instead of quarterly. This revised schedule ensure a more meaningful discussion of our achievements and initiatives, avoiding the short-term focus often associated with quarterly updates. The next earnings call will be conducted following the release of our annual results, aligning with our commitment to providing stakeholders with substantive and well-rounded insights. With that, I would like to extend my deepest gratitude to all our stakeholders. Your unwavering support has been instrumental to our success. We look forward to continued growth and success together. I now open the floor to any questions you may have. Thank you.

[Operator Instructions] The first question is from the line of Nikhil Poptani from Kizuna. As there is no response from the current participant, we move on to our next question. The next question is from the line of Aditi Roy from Patel Advisor.

My question is, how have operating costs evolve in Q2 FY '25? And what steps is the company taking to manage cost in the face of rising inflation or other challenges?

Can you just repeat your question? Your voice is not clear to us.

Sorry, ma'am. Now is it clear?

Yes.

My question, how have operation costs evolve in Q2 FY '25? And what steps is the company taking to manage costs in the face of rising inflation or other challenges?

Hello. Yes, along with me, our Chairman of the company, Mr. Vishnu Patel, is also there. See, basically, when we are talking about the operational cost, we have a defined benchmark as per the industry standard. And our operational costs are within control and within the industry benchmark. It ranges around 60% to 70% throughout the year based on the occupancy and the various reasons.

The next question is from the line of Angad Katdare from Sameeksha Capital.

My first question is on the Lakshadweep property. So land got a permission for 5 years, and the potential to your extension. So I just wanted to understand, will this tenure start once we operationalize the property? Or has it already started? Can you throw some light on that?

Basically, the period will start from the date we commence the operation.

And can you throw some time line, a rough time line on the properties when they'll come live?

Our first resort will get opened in the month of December.

And for the others, any rough time line?

Still, the others will be opening somewhere around February -- February to March.

Safe to assume Bangaram 1, 2 and Thinnakara, along with Agatti, all properties will be like this?

Bangaram will be opened in the month of December, and Thinnakara 2 properties will be opened in the month of February -- February to March -- in between February to March.

Okay. Okay. And any updates on the Varanasi Tent City, the ongoing issue?

No, there is no update from the government for the Varanasi property. We are in continuous -- in touch with them to explore the other possibilities. But meantime, we have started mobilization of the infrastructure, what's available with us in the Varanasi, and we have started using it in our different expansion projects.

Okay. Just some questions related to line items in our financials. In our balance sheet, there's a goodwill of INR 17 crores. Safe to assume that's due to the acquisition that we have made this quarter -- last quarter?

To consolidate the finance, so we need to provide the effect for the goodwill.

Sorry, ma'am, I missed the initial part.

It's basically, as we told earlier, we have acquired the Abhik and Bidhan, right? So the -- in the consolidation part, the goodwill part has been incorporated to accommodate the difference between the book value and the purchase price.

Okay. And we also added debt in this quarter, like around INR 8 crores. So any -- can you throw some light on that as well?

Can you just repeat your question?

We also have added a debt of around INR 8 crores in balance sheet. Can you throw some light on that as well?

INR 8 crores?

Yes, debt.

Yes, please hold on.

Noncurrent borrowings is around INR 4 crores, and current borrowings is around INR 3.69 crores.

Yes. Actually, this is of the subsidiary company, Bidhan Advertising. So there was one outstanding over there, which, after giving the acquisition, so that has been squared off.

Okay. Noted. And just one final question. Any plans to list on NSE in the near future?

NSE? Yes. I introduce our Chairman, Mr. Vishnu Patel, for giving some updates on this.

Actually, first of all, welcome all my stakeholders and analysts on this con call. The -- we have already listed in the BSE. There is 1 norm. The norm is saying [Foreign Language]. So 3 years, previous 3 years, each results surplus and capital should be minimum INR 75 crores. So we will not fall in this criteria for '22 and '23. So when we complete this criteria for preceding 3 years, each year, minimum reserve surplus and capital should be INR 75 crores. We are going to achieve this [Foreign Language]. We will list to the NSE also. So we are already under process to register -- to list before NSE. Thank you.

[Operator Instructions] The next question is from the line of Nikhil Poptani from Kizuna.

Am I audible?

Yes, Mr. Poptani.

Yes, sir. So my first question is, like, are we like on the track to achieve our annual guidance of FY '25? That is my first question. And secondary question is that, in the H1, our margins have taken a hit. So sir, how are we planning to gain back the margins? Like are there any levers to increase the margins?

Can you -- the second question is clear regarding the margins. Can you just repeat the first question?

Yes. So my first question is, like, are we on the track to achieve our annual guidance of FY '25? Or are we like going to make some changes on that?

Yes. Nikhil, thanks for your question. The annual guidance, we are working on expansion right now. We have already launched 15 hospitality projects, which is recently. Since last 6 months, majorly, we have put into operation. The margin [Foreign Language]. So major operation we have started in the last half year, 6 to 9 months [Foreign Language] in terms of occupancy, in terms of wedding business, in terms of conference, in terms of business conference. [Foreign Language]. Number one. Number two. [Foreign Language] So our turnover has increased from at least double pre-quarter. In this quarter also, the quarter 2 of '23 stood at INR 14 crores. Right now, we are at INR 35 crores. So you can presume [Foreign Language] at least we are doing double in the business. Number one. [Foreign Language] Bangaram Resort in December, Kachigam in December this quarter, Jawai in December, then after Jalandhar in December. We have just recently signed the agreement with the -- partnering with the Taj Group. Taj Group will do operation for our Jalandhar. That is indeed a world-class property. Just some days before, we have hosted the President of India there. So it is a very great property, which we are partnering with the Taj Group. So that's also going to start in this December operation, November-December operation. Same way, Silvassa, we are starting in November. Then after Adalaj, we are going to start in the fourth quarter. So these 5 properties, plus the exclusive property in Thinnakara 1 and Thinnakara 2, which is already full pressure of development is going on at site. We got 15th September logistic approval. The worse problem in the weather season, the monsoon season, was there's some problem. So we have started the development in 15th September 2024. So my team is optimistic to conclude to operationalize in February. Maybe 1 resort will be started in February or 1 maybe in March. So 250 rooms will be operationalized in fourth quarter, 200 in fourth quarter, 50 rooms in third quarter. So we are starting exercising to operationalize it. So all these together, you get good results in coming years -- to coming year.

Okay, sir. Glad to hear that. And so my second set of questions. Sir, my other question is like...

[Foreign Language] So second quarter is always weak for Praveg also, as per industrial kind of thing. Third quarter and fourth quarter is always good. First quarter, in our case, earlier, first quarter is also weak. Second quarter also weak. But since we have started, we have operationalized coastal beach property like the Daman. And right now, we are also operationalized in Bangaram and Thinnakara in this coming quarter. So our seasonal variation in terms of first and second quarter, now first quarter will be improved from the next season. Only the second quarter will always be as per industrial scenario of the experiential hospitality company. So out of these 4 quarters, second quarter, always here, you will see some lower numbers and lower margins, lower bottom line, too. Thank you. Now you please ask questions.

Yes, sir. That is great to hear, sir. Thank you for the insight. So my next question is, like, what are the tendering activities right now going on? [Foreign Language]

Yes. Already, now we got most of clearance in Alibaug. So we are -- first, I have to clear whatever we have already awarded project. Alibaug 1, we got clearance from the government. And soon, we can start construction development in the fourth quarter. Same way, we are already under process for environment clearance for Serengeti, out of country, 1 project we have envisaged. [Foreign Language] Okay. We can contribute 40% EBITDA margin. That is our benchmark for average period of operations. So 40% of [Foreign Language] So already, tenders [Foreign Language] we are choosing out of that property which one we can have some good returns and good locations in terms of future potential of visitors, tourists. Thanks.

The next question is from the line of Raj Mehta from Raj Mehta & Associates.

Can you hear me, sir?

Yes.

Yes. So basically, I wanted to ask a few questions related to the properties in Lakshadweep. So we are focused more on Lakshadweep. Our, I think, more than 30% to 40% future revenues will be dependent on the Lakshadweep 2 resorts. So you told that one is going to be operational in December and second is going to be operational in Feb or somewhere around March. So if -- so what is the current status regarding the bookings? How is your experience related to the December result, which you are going to get operational? Is it getting occupied easily? Or it is becoming tough? And how is the -- since the airports are not yet operationalized, if flights are very minimal, so how are you planning to push these resorts into more sales and more occupancy rate so that we can increase our occupancy rate?

Yes, very good questions. Raj Mehta, good question. We have internally lined up to help operationalize Bangaram in December. Always, we take more 15 days to make it feasible in terms of getting to soft launching. [Foreign Language] We are wasting minimum time to have this process. [Foreign Language] You can Google Bangaram. [Foreign Language] So that is around 3-star property right now. [Foreign Language] So you can have your own judgment and analytics [Foreign Language] But we are very optimistic. [Foreign Language] We are very much confident that Bangaram, out of 12 months, or Thinnakara, out of 12 months, we will host 8- to 9-month good occupancy. [Foreign Language] Already, inquiry and select travel agent of South India is connecting to us. And we are very enthusiastic and optimistic [Foreign Language] I assure to all my stakeholders. [Foreign Language] In the best interest of Indian tourists, in the best interest of Lakshadweep, in the best interest of Praveg stakeholders [Foreign Language]. Number two. [Foreign Language] The government of India already [Foreign Language] water activity, maybe they introduce a sea plane, maybe they introduce all-India -- some good marketing strategy. [Foreign Language] So they will also invest lots of marketing budget for promoting Lakshadweep. [Foreign Language] I assure you [Foreign Language]

[Foreign Language] plus we are also developing other resorts [Foreign Language]