Kamat Hotels India: A Feast for Value Investors?
I. Overall Rating & Recommendation:
Rating: 7/10 (Buy with Moderate Caution)
Recommendation: Kamat Hotels presents a compelling value proposition despite some risks. Strong financial performance, improving industry outlook, and attractive valuation warrant a buy. However, exercise caution due to potential macroeconomic headwinds and high beta.
II. Company Analysis:
Sector: Hotels & Resorts
Market Cap (as of Jan 21, 2024): ₹885 Crore
Current CMP: ₹357.20
Products: Kamat Hotels operates a chain of mid-range, family-friendly hotels across India. Revenue predominantly comes from:
Room Revenue (75% of revenue)
Food & Beverage Sales (20% of revenue)
Other Services (5% of revenue)
Financials:
Strong recent performance with 106% revenue growth and 1271% profit growth for FY23.
Healthy ROE (203%) and ROCE (73%) indicate efficient capital utilization.
Low debt-to-equity ratio (0.23) provides financial stability.
III. Macroeconomic Factors:
Reviving travel and tourism industry post-pandemic bodes well for Kamat Hotels.
Government initiatives promoting domestic tourism could further boost the sector.
Inflationary pressures and potential economic slowdown pose challenges.
IV. Technical Analysis:
Daily chart trend indicates an upward channel with breakout potential above ₹370.
Relative Strength Index (RSI) nearing 70 suggests some overbought conditions, warranting caution.
V. Future Predictions:
Assuming smooth market conditions, a CAGR of 15-20% could be achievable in the next 5 years.
Historical CAGR (past 5 years) for both Kamat Hotels and its index have been strong, reflecting industry recovery.
VI. Ratios:
Debt-to-equity ratio: 0.23
Shareholder ratios: ROE: 203%, ROA: 39%
Sortino ratio: 1.2 (moderately downside sensitive)
PEG ratio: 0.28 (undervalued)
Price-to-sales ratio: 2.74 (within industry average)
Beta: 1.74 (more volatile than NIFTY and hotel sector index)
VII. Conclusion:
Kamat Hotels presents a promising investment opportunity with robust financials, attractive valuation, and a favorable industry outlook. However, manage risk with moderate exposure and monitor macroeconomic developments.
#multibaggerstocks#fundamentalanalysis
Click here to take demo class or contact on this no. 9815173901 to enroll in our upcoming batch.
Comments