Praveg Limited (531637) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Praveg Limited H2 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ganesh from Kirin Advisors. Thank you, and over to you, sir.

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

Thank you. Good evening, everyone. It is my pleasure to welcome all of you to the conference call for Praveg Limited. Thank you for joining us today. Before we dive into the detailed performance review for the second half of the financial year 2024-'25, I would like to share a brief overview of our company and recent developments. At Praveg, we are proud pioneers in the field of eco-responsible luxury hospitality. Our vision is to blend sustainable tourism with premium-guest experiences. Our properties are thoughtfully developed in areas of cultural and ecological significance, enabling us to offer exclusive travel experiences, while preserving the integrity of local ecosystem. In addition to our core Hospitality business, Praveg continues to excel in the event management space. We enter the high-growth destination wedding and premium banquet segment creating a strong avenue for future revenue generation by offering holistic event solutions from venue management to event coordination, we aim to be a one-stop solution for luxury experiences. During the second half of financial year '25, Praveg Limited made significant strides in the expanding its footprint and strengthening its market position in the eco-luxury hospitality and event space. We formed a strategic partnership with Lallooji & Sons as master franchisee for marketing and booking of 400 luxury tents at Rann Utsav 2024-'25. Praveg also led even conceptualization, consulting, management and active coordination, offering the premium visitor experience at this iconic festival. We expanded our resort network with four new launches, Praveg Resort at Daman Ganga, Silvassa and Praveg Beach Resort at Jalandhar House, Diu, strengthening our presence in culturally-rich scenic locations. On January 1, 2025, we began operations at Praveg Caves Jawai at an upscale resort in the wilderness that deepens our luxury offerings. Shortly after that, on January 18, we launched Praveg Atoll's on Bangaram Island, Lakshadweep. Managed by IHCL under the SeleQtions brand, this resort merges global luxury standards with the island's pristine beauty. In a major operational move, we partnered with Roots Corporation Limited, Ginger, an IHCL brand, blending our eco-luxury concept with Ginger's service excellence to enhance guest experience and property management. We also signed a 3-year agreement with Mahindra Holidays & Resorts India Ltd., allocating 80 (sic) [ 70 ] rooms across selected Praveg properties to integrate with their holiday network. Together, this H2 financial year '25 milestone reflects Praveg's focused execution of its eco-conscious, experience-driven growth strategy. Turning to our financial performance. We are pleased to report robust growth across key metrics, reflecting the success of our expansion strategy and the strength of our business model. For the fourth quarter of financial year '25, on a consolidated basis, total income stood at INR 59.29 crore compared to INR 33.50 crore in the same quarter last year. EBITDA grew to INR 16.60 crore from INR 9.46 crore, while net profit rose to INR 3.42 crore, up from INR 1.59 crores. Earnings per share for the quarter increased to INR 1.58 from INR 0.73 in Q4 financial year '24. On a stand-alone basis, for the same quarter, total income was INR 43.62 crore, up from INR 33.50 crore. EBITDA stood at INR 11.90 crore compared to INR 9.36 crore. And net profit rose to INR 3.11 crore from INR 1.48 crore with EPS at INR 1.18 versus INR 0.68 in the previous year's quarter. For the full financial year, financial year '25, we delivered strong performance as well. On a consolidated basis, total income was INR 174.43 crore, a substantial increase from INR 94.55 crore in financial year '24. EBITDA rose to INR 56.88 crore from INR 32.14 crore. And net profit grew to INR 16.13 crore compared to INR 12.95 crore last year. EPS for the year was INR 5.96, slightly up from INR 5.78. On a stand-alone basis, full year income rose to INR 139.60 crore from INR 94.37 crore. EBITDA improved to INR 45.70 crore from INR 32.03 crore. And net profit came in at INR 12.95 crore compared to INR 12.84 crore in financial year '24. EPS was INR 5 compared to INR 5.73 in the previous fiscal. In terms of segmental performance, the Hospitality & Events segment contributed to INR 45.65 crore to revenue, while the advertising segment generated INR 12.41 crore in Q4 financial year '25. We currently operate 775-plus rooms across 15 resorts and 1 hotel, and we are well on track to achieve our Vision 2028 goal of managing over 2,500 rooms across 55 to 65 locations. We are extremely encouraged by our revenue and operating profit growth, even as recent expansion has resulted in higher depreciation, temporarily impacting net margins. As these new properties mature and stabilize, we expect to see improved profitability going forward. Looking ahead, we remain highly optimistic about the future. The Indian hospitality industry is poised for accelerated growth with the rising demand for personalized premium and experiential travel. Our eco-conscious luxury offerings are uniquely positioned to meet this demand, particularly in emerging Tier 2 and Tier 3 cities. As we expand further and deepen our partnerships, we remain committed to delivering sustainable growth and shareholder value. On behalf of the entire management team, I extend our sincere gratitude to all our stakeholders, investors, customers, partners and employees. Your trust and support have been instrumental in our journey so far. We look forward to continuing this journey together with confidence and with purpose. With that, I would now like to open the floor for any questions you may have. Thank you.

[Operator Instructions] We take the first question from the line of [indiscernible] from MAS Capital.

First, congratulations, very heartening to see the partnerships with IHCL and Mahindra Group, which actually gives a validation of the curated and exclusive properties that Praveg is building. I'm also happy with the statement that Vision 2028 of -- which is of 2,000 plus -- 2,500-plus rooms is also being retained. My question was in this regard. We did speak about in the past about international expansion. Can you throw some light in terms of in the Vision 2028 which is 2,500-plus rooms, what percentage share will be of international? And if we have made any progress in expansion in any of the countries, if you can share some plans?

Sure. Our Chairman, Mr. Vishnu Patel will throw lights on this.

Thank you, MAS Capital -- MAS Capital. Thank you, Ganesh, investor, investor representative and analysts. As asked by you, our development overseas is nearby [Foreign Language] Serengeti, we have just 2 days before, get environment clearance, that is the final certification for that project. And that project team is working on it. Soon, we will deploy our team to the Serengeti and the work will start. We want to finish that project as early as possible, and there is a good potential in terms of strategic alliance internationally and that 25 room, which we are developing will generate the revenue more than Indian revenue per room revenue we got. Secondly, we are trying to acquire further resort location at Masai Mara, so that two location is highly strategical, so we are working on that. Thank you.

Very, very happy to hear this. I think there's a big contingent of Indian travelers who visit these two locations that you mentioned. So very happy to know that it's finally happening. Congratulations on that. Sir, my second question was, is there a change in strategy? The reason I'm asking, sir, because if I see the earlier projects like especially [Foreign Language] versus now are becoming more exquisite and high end, which may be 20 to 30 rooms or cocoons or various interesting concepts like the Jawai or the caves that you're doing. Is there a change in strategy, sir? Or can you throw some light on that?

This is not a change of strategy. This is already focused by the Praveg and Praveg creative team. We want to give some more value addition to the experiential hospitality. That's why we are working on a unique model that is Praveg specialty. My total engineering team of 50 people executing that dream whatever we visualize in our head office for the particular project. There is two things which is very important for us. We want to work only in experiential hospitalities, beautiful, scenic, rivers, seashores, jungles, like that places where we can give more experience to my tourists, my guests, that is the basic purpose. And obviously, as a commercial entity, we also have an interest to generate more ARR for such kind of locations. So now we are working to generate more ARR-basis location where there is a lower competition, but there is location-added advantages like Serengeti in Kenya. So like Lakshadweep, that's why we are focusing this segment major way. Unlike already promised before 2, 3 con call before 1 year, that my company is not interested to work in city metro hotels like model. We are in some different kind of models that we are working on it. And in terms of total Vision '28, we are further acquiring more properties, more locations, which will -- you get a good location ideology of the Praveg. So we are working on that. In this year, we have planned to build 5 to 10 resorts, which we are under progress.

Sure, sir. In fact my question -- next question was on -- yes, sir. Please go ahead.

So right now, we are operating in 17, 18 resorts. Still 2, 3 locations is under development, which you get a strategical date of operation. In Lakshadweep these are rainy season. So we are going to start in October that operation. So we are working on that to conclude as -- so as to a maximum we can generate revenue as well as reputation over Lakshadweep. Thank you.

Sure. Sir, can you kind of share the guidance for FY '26, given I think you -- in the presentation, it's very nicely laid out that I think 9 more upcoming resorts, which kind of adds 505 rooms. So is my reading correct that we will end FY '26 with around 1,250 to 1,300 rooms? If yes, what is the ARR that we will end with at FY '26? If you can just share that.

I would like to tell you one thing. The guidance is dependent upon the operationalization of the resorts, number one. Number two, the matter is when we are operating the resort and starting the operation, so there is a -- we need to give some time in terms of marketing, branding as well as exploring that location. We need to have minimum 5, 6 months to 12 months is -- that's our experience. So what happened in the last -- this year, we have started operation of 18 resorts. Out of that, around 60% resorts is inaugurated in this year only. So in terms of EBITDA margin, in terms of sales volume, it's going to change in the next year then when the property is older by 2 years, it will further add more ARR as well as more occupancy. So it depends upon that. And get this -- my result is itself speaking that we will reach to our target for the operation of 25 resorts in this year, that I can say that the revenue is always upward will increase in this year, this current year, because of last year all out of 17, 18 resorts, 60% resort was operation for 3 months, 4 months, 8 months maximum. So there we need some time to reach to our desired goal of 40% EBITDA margin. We're always working for EBITDA margin, average EBITDA margin of 40% over a period of -- project period, which is being awarded to us by government. [Foreign Language], then only we trigger that acquisition. So that is our philosophy. And I would like to tell you, in the first year of major operationalize this '24 -- March '25, you can see that 35% or 34% EBITDA margin in the first year we reached. So the more lucrative and more incremental EBITDA margin, you will find in '26 as well as in terms of turnover also, you will find a major chunk of incremental revenue from top -- in top line. Thank you.

The next question is from the line of [ Vaidik ] from Monarch Network Capital.

Sir, congratulations, sir, on good set of numbers. Firstly, sir, my question is on the gross margin front. I just wanted to ask on a sequential basis, our revenue has increased by 7%, but gross margin has expanded by close to 10%, 11%. So what costs are being added to that event and site expenses. Can we know that? And the reason behind gross margin contracting?

Just wait. Are you talking about standalone or consolidated? EBITDA margin?

Gross margin, gross margin.

EBITDA, you're talking about?

Both, sir.

So gross margin was 35.09% for '24, it's come to 34.02%, right?

No, sir.

It's a 35% EBITDA margin in last year. This year is 34% EBITDA margin in consolidated.

Okay, sir. And sir, on the next question in the presentation...

So 1% EBITDA margin variation. This variation is dependent upon the newly -- proportion of the newly started resorts in this year was maximum -- it was in March '24 there was only 5, 6 resort was operationalized. In this current March ending 2025, we have started around 10 to 12 new resorts. So always in beginning, our margin is also under pressure. Once the properly -- the time period for marketing, social media or where the promotion strategy of the Praveg will come into effect after 6, 7, 8, 12 months that lead to a higher EBITDA margin, higher gross margin. That's a natural process of the hospitality industries.

You're talking about -- sir, you're talking about full year. I was talking about on quarterly -- in the current quarter, Q4. But other than that, a few other questions. Firstly, in the presentation, you mentioned that we have around 505 upcoming rooms in this year. So I just wanted to know for how many resorts have we got approval? And by when will they be operational?

Okay. I would like to tell you, we got this clearance from -- for Serengeti. We are already working under development, the Thinnakara II, there's a 200 rooms. Serengeti is at 25 rooms. Kashid and Kihim, out of that, one resort's approval is nearby to complete, it's around 35 to 40 rooms. Then after Jaisalmer we are working on that direction, there is around 40 rooms, 50 rooms, that all will come in this year. Apart from that, there is always chances to have more acquisition during the current year. The acquisition maybe of the ready property, may be underdeveloped property. It depends upon the market scenario.

Sir, in the presentation, you mentioned Udaipur, 35 rooms; Ranthambhore, 30 rooms; Bangaram II, 100 rooms; Agatti Island, 50 rooms; Kihim and Kashid, 40, 40 rooms each. So what's the status over that?

Exactly. Out of that, I have explained the status of these 6 resorts is under progress as well as ready to progress, ready to start with development process -- I have just told you, Serengeti, Thinnakara II -- Bangaram is Thinnakara [Foreign Language] Bangaram is already operational. 50 room is already given to Indian Hotels, just we have told you about it. January 2025, we have started Bangaram resorts. Instead of Bangaram, you put as a Thinnakara II resort. Bangaram and Thinnakara is nearby islands. So there may be some correction that Thinnakara II is 200 rooms. And Jaisalmer that's almost -- clearance is near to come. So total 6 resort is under development out of that 2 resort is under development already nearby finishing stage or resort's legal clearance is already done. So it will work on that direction.

The next question is from the line of Gautam Gosar from Monarch AIF.

First question is on your ARR. So if I go through your PBT, in some of the properties there has been a decline in the ARR than what we used to indicate. So for example, in our Kevadiya property we used to indicate around INR 10,000 to INR 10,500 ARR. In Jawai we used to indicate around INR 25,000 ARR which has come down to around INR 18,000 to INR 22,000. So can you just understand what is leading to this impact?

Yes. Jawai, our properties just started in February -- January, February 2025. Then after the season is on summer season. [Foreign Language] So always, we have to have a seasonal tilt in such cases. [Foreign Language] Initially, we are keeping the track [Foreign Language] then after it's going to improve ARR. Always, we need to have minimum 1 year for improving ARR status of the new project. So Jawai is a new...

Understood, sir. What about -- property. For the new properties, we can understand that but for the update older properties, like Kevadiya there also we are seeing some...

I like to tell about Kevadiya also, but just you told me [Foreign Language] there isn't any competition in the Kevadiya also. So [Foreign Language] to improve the occupancy we are trying to have some balance ARR looking to the competitive scenario. Same way in last year, there was not -- certain date is blocked for government business is not accumulated into -- converted into business. But this year, we are getting good response, and we have catered 3, 4 conference in current quarter also. [Foreign Language] So we have always strategically balanced ARR as well as conference and government business also. Thank you.

Okay. Sir, secondly, on our occupancy of Kevadiya, which you are talking about, so sir, are we seeing any decline in the occupancy for our existing properties in some of the areas like Kevadiya, where the footfall rate should be higher in initial year and now it is slowing down?

It's not about occupancy decrease. Occupancy, I think already, we are maintaining occupancy level of the property. And that's why the property is made. [Foreign Language] ARR, plus-minus is a strategical decision sometimes. As well as seasonal effect is also to be considered. This year, what happened, I would like to tell about investor about the scenario of the last quarter. Last quarter, there was a major boom at Kumbh. Kumbh marketing was all we are knowing, all the public was diverted to Kumbh. So its -- affected to other property for tourist also. [Foreign Language]. So that's why we have to balance the occupancy level as well as marketing ARR. So certain extraordinary steps we have to take in this quarter -- last quarter. So that is also effect of gross margin, some variation, EBITDA margin, some variation. Thank you.

Sir, if you can help us understand how much revenue did -- we did in Kevadiya project in this year as well as last year? So we can understand the trend, how much revenue are we generating from this property?

It's being -- our competitor scenario is also there. I would like to not comment about the total revenue. That is a strategic decision. But I would like to tell you my Kevadiya performance in earlier year and this year, there is a variation of about 15% in total sell volume. 15% to 20% sell volume is impacted. And that is not due to occupancy, but it is due to government business, please understand. So that impact, 15% to 20% impact of the sales is majorly due to government business. This year, we have re-strategized the strategy. We have taken a good conference of Supreme Court of -- Chief Justice came just in 1 month before in our property. Apart from that, Rajasthan government has done great conference here also in 7th May -- 5th, 6th, 7th May. Apart from that, there is also another private conference is there. Apart from that, this year, we are doing very few weddings in Kevadiya. This year we are getting good in terms of manyfold incremental in wedding revenue this year. So we have re-strategize. I would like to rest assure that this year is going to contribute by Kevadiya will be tremendous incremental to us.

And my last question, the lease cost, how much rental have we paid in this year in FY '25? How much is the lease cost?

Lease cost is dependent upon total.

No, sir. I'm asking how much we have paid already in FY '25?

Kevadiya? Talking about Kevadiya?

No, no...

INR 16 crore. This year we paid about INR 16 crore rent total. So it's about -- you can understand 10% of the total revenue. And this year, revenues got -- is the beginning for the Praveg journey. So these 17 property will come in -- some property come into second year of operation, some property coming to third year operation, some property -- very few property come after 5 years of operation experience so that product mix will contribute sales as well as EBITDA margin as well as bottom line, because [Foreign Language]. You have to give some time to Praveg, I would like to tell my investor that [Foreign Language] it needs some time. [Foreign Language] We need to give some more time because of [Foreign Language] then after 1, 2, 3 years, you have to reach to breakeven point. [Foreign Language] sizable contribution, net profit [Foreign Language] even first year of operation, no hospitality company in India generating net profit, you can study all the hotels model. Thank you.

[Operator Instructions] Next question is from the line of Nikhil from Kizuna Wealth.

Sir, I have a question on your Vision 2028, we are saying that we're going to go beyond 2,500 rooms, right now [Foreign Language].

Yes. We have already resources to have a fund of warrants that will suffice to develop this high resort. Out of that, Thinnakara is already, we have invested huge cost for Thinnakara. For Jaisalmer, for Kashid, for Serengeti, we have our own fund for the company as well as warrants for that. Third one, I would like to tell you that many proposal is under our vetting for the investment model that's called operation and development model. That is a third model. This is a different model started by the Praveg. [Foreign Language] turnkey solution in terms of development, that means our engineering, our architects, our structure, our MEP design, our landscape consultant, which is in-house team of the Praveg, will design and visualize that resort. My development team will do the development of that project, we get certain profit on that development also. That will be major sale -- that will make a major sale contribution in terms of top line and bottom line also. And after that ready, we will operate it for 30 years or -- 30 years or 15 years depends upon the lease period if it's not owned by that investor. In that case, 15 years, 20 years, 30 years depend upon that agreement. [Foreign Language] So this is a unique model, which we have launched already, and we will get certain outcome in very near future. So for that, we not need to have CapEx. Instead of CapEx, we get the revenue for development of that property, please understand. Along with operation regular income.

Okay, sir. [Foreign Language] for these additional rooms, right, sir? That's what you have indicated?

We are a debt-free company right now. We do not want to raise any debt. That is our strategy. But maybe promoter can or promoter group can contribute fund if required in that case, if the fund is required.

Okay, sir. That's great to hear. And sir, now you have done a strategic alliance with IHCL and Mahindra. So sir, [Foreign Language].