Net Profit (Q3 FY26)
₹9.28 Cr
▲ Returned to profit
Revenue Growth (YoY)
+66.64%
₹90.45 Cr in Q3
Operating Margin
29.02%
Highest in 8 quarters
Average ROE
28.25%
Strong capital efficiency
The company, with a market capitalisation of ₹784.00 crores, operates in the experiential hospitality space with luxury tent resorts and heritage properties. The December quarter results displaycased impressive top-line expansion, with net sales surging 141.20% quarter-on-quarter and 66.64% year-on-year to reach ₹90.45 crores, the highest quarterly revenue in the company’s recent history. This performance was driven by the peak tourism season and increased occupancy rates across its properties.
Despite the strong headline numbers, the stock has faced relentless selling pressure, declining 32.78% over the past six months and currently trading 56.01% below its 52-week high of ₹667.95. The sharp correction reflects investor concerns about the company’s pronounced earnings volatility, with the business swinging from a ₹10.55 crore profit in Q4 FY25 to consecutive losses in Q1 and Q2 FY26, before rebounding in Q3. This seasonal unpredictability remains a critical overhang on valuation multiples.
Financial Performance: Seasonal Strength, Structural Questions
The December quarter demonstrated Praveg’s ability to capitalise on peak tourism season, with net sales of ₹90.45 crores representing a substantial 141.20% sequential increase from ₹37.50 crores in Q2 FY26. On a year-on-year basis, revenue growth of 66.64% significantly outpaced the company’s five-year sales compound annual growth rate of 26.71%, suggesting accelerating momentum in recent periods.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | Operating Margin |
|---|---|---|---|---|---|
| Dec’25 | 90.45 | +141.20% | 9.28 | Profit | 29.02% |
| Sep’25 | 37.50 | -4.80% | -9.67 | Loss | 9.63% |
| Jun’25 | 39.39 | -32.16% | -6.14 | Loss | 14.57% |
| Mar’25 | 58.06 | +6.96% | 4.06 | -55.34% | 26.47% |
| Dec’24 | 54.28 | +72.65% | 9.09 | +540.14% | 39.55% |
| Sep’24 | 31.44 | +34.36% | 1.42 | +86.84% | 20.48% |
| Jun’24 | 23.40 | — | 0.76 | — | 27.09% |
Operating profit before depreciation, interest, tax, and other income (PBDIT excluding OI) surged to ₹26.25 crores in Q3 FY26, yielding an operating margin of 29.02%, the highest recorded in the past eight quarters. This represented a dramatic improvement from the 9.63% margin in Q2 FY26 and compared favourably with the 39.55% margin achieved in the year-ago December quarter, though still below that exceptional level.
The profit before tax of ₹10.92 crores marked a sharp reversal from the losses of ₹8.91 crores and ₹5.44 crores in the preceding two quarters. However, the consolidated net profit of ₹9.28 crores, whilst positive, remained below the ₹10.55 crores posted in December 2024, indicating that despite higher revenues, absolute profitability has not yet exceeded prior peak levels.
Net Sales (Q3 FY26)
₹90.45 Cr
▲ 141.20% QoQ | ▲ 66.64% YoY
Net Profit (Q3 FY26)
₹9.28 Cr
▲ From -₹9.67 Cr loss (Q2)
Operating Margin (Excl OI)
29.02%
▲ From 9.63% in Q2 FY26
PAT Margin
10.98%
▲ From -24.59% in Q2
Employee costs rose to ₹10.73 crores in Q3 FY26 from ₹7.74 crores in the previous quarter, reflecting seasonal hiring to manage peak occupancy. Interest costs increased to ₹3.39 crores from ₹2.68 crores, the highest quarterly interest burden in recent periods, indicating growing debt service requirements as the company expands its property portfolio.
Capital Efficiency: Strong Historical Returns, Recent Deterioration
Praveg has historically demonstrated impressive capital efficiency, with an average return on equity (ROE) of 28.25% over recent years, significantly outperforming most peers in the hospitality sector. This higher ROE indicates the company has been effective at generating profits from shareholder capital, a key strength that has attracted long-term investors despite the seasonal volatility.
The average return on capital employed (ROCE) of 37.76% further underscores the company’s ability to generate strong returns from its invested capital. However, the latest half-yearly ROCE has plummeted to just 2.30%, the lowest recorded level, raising concerns about whether the company’s historical capital efficiency can be sustained as it scales operations and adds new properties.
⚠️ Capital Efficiency Warning
Whilst Praveg’s average ROCE of 37.76% demonstrates strong historical capital efficiency, the latest half-yearly ROCE has dropped to just 2.30%, the lowest on record. This sharp deterioration coincides with aggressive capacity expansion and suggests potential challenges in maintaining historical return levels. The company’s debt-to-equity ratio has also increased to 0.24 times in H1 FY26, the highest level, indicating rising leverage to fund growth initiatives.
The balance sheet displays shareholder funds of ₹463.22 crores as of March 2025, up substantially from ₹287.84 crores in the previous year, driven by retained earnings and equity issuances. Fixed assets surged to ₹242.43 crores from ₹122.40 crores, reflecting significant capital expfinishiture on new properties and renovations. Current assets stood at ₹127.81 crores, though cash and cash equivalents have declined to ₹10.85 crores in H1 FY26, the lowest level in recent periods.
The debt-to-EBITDA ratio of 0.92 remains manageable, and the net debt-to-equity ratio of 0.22 indicates relatively conservative leverage. However, the rising interest costs and declining cash balances warrant monitoring, particularly given the capital-intensive nature of hospitality expansion and the seasonal cash flow patterns inherent in the business model.
The Volatility Challenge: Seasonal Swings and Earnings Unpredictability
The most significant concern for investors remains the pronounced earnings volatility that characterises Praveg’s financial performance. The company’s results demonstrate extreme seasonal fluctuations, with the December and March quarters typically generating strong profits whilst the monsoon quarters (June-September) often result in losses or marginal profitability.
In the first nine months of FY26 (April-December 2025), the company posted a consolidated net loss of ₹6.53 crores, despite the strong Q3 performance. This cumulative loss underscores the challenge of achieving consistent full-year profitability when two quarters generate losses that offset gains in peak seasons. For FY25, the company reported annual net profit of ₹16.00 crores, representing a PAT margin of just 9.6% despite revenue of ₹167.00 crores.
| Period | Revenue (₹ Cr) | Net Profit (₹ Cr) | PAT Margin | Key Observation |
|---|---|---|---|---|
| Q3 FY26 | 90.45 | 9.28 | 10.98% | Strong peak season |
| Q2 FY26 | 37.50 | -9.67 | -24.59% | Monsoon loss |
| Q1 FY26 | 39.39 | -6.14 | -14.60% | Off-season loss |
| 9M FY26 | 167.34 | -6.53 | -3.90% | Cumulative loss |
| FY25 (Full Year) | 167.00 | 16.00 | 9.60% | Annual profitability |
The company’s five-year EBIT growth rate of -1.85% highlights that operating profit expansion has not kept pace with revenue growth, indicating margin pressures and rising operating costs. This negative EBIT growth trajectory, combined with the seasonal volatility, explains why the stock trades at a significant discount to historical valuations despite recent revenue momentum.
“Praveg’s ability to generate ₹90 crores in quarterly revenue demonstrates strong demand for experiential hospitality, but the persistent inability to maintain profitability across all quarters raises fundamental questions about business model sustainability and operational efficiency.”
Industest Leadership: Valuation Discount Reflects Execution Concerns
Praveg operates in the niche experiential hospitality segment, competing with luxury tent resort operators and boutique heritage properties. The company’s market capitalisation of ₹784.00 crores positions it as a micro-cap player in the broader hotels and resorts sector, which includes much larger established chains.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield (%) |
|---|---|---|---|---|---|
| Praveg | NA (Loss Making) | 1.73 | 28.25 | 0.22 | 0.34 |
| Advent Hotels | 52.07 | 1.35 | 0.00 | 0.00 | NA |
| Royal Orchid Hotels | 22.83 | 4.39 | 17.56 | 2.69 | 0.65 |
| Viceroy Hotels | 29.35 | 3.92 | 6.52 | 0.15 | NA |
| Mac Charles | NA (Loss Making) | 12.39 | 0.00 | 15.38 | NA |
| HLV | 57.30 | 1.25 | 2.57 | -0.26 | NA |
Praveg’s current loss-building status on a trailing twelve-month basis means it trades without a meaningful P/E ratio, though the company’s average ROE of 28.25% significantly exceeds most comparable peers. The price-to-book ratio of 1.73x appears reasonable compared to peers like Royal Orchid Hotels (4.39x) and Viceroy Hotels (3.92x), suggesting the market is pricing in substantial execution risk and earnings volatility concerns.
The company’s dividfinish yield of 0.34%, based on the latest dividfinish of ₹1.00 per share declared in August 2025, lags peers like Royal Orchid Hotels (0.65%). The dividfinish payout ratio of 16.29% indicates conservative capital allocation, with management prioritising reinvestment in property expansion over shareholder distributions.
Valuation Analysis: Attractive Entest or Value Trap?
Praveg’s current valuation presents a complex picture. The stock trades at ₹293.80, down 53.73% over the past year and 56.01% below its 52-week high of ₹667.95. The price-to-book value of 1.73x represents a significant discount to the sector average, whilst the book value per share of ₹169.38 provides some downside support.
The company’s valuation grade has improved to “Attractive” from “Fair” in October 2025, following the sharp price correction. However, the absence of a meaningful P/E ratio due to trailing losses limits traditional valuation comparisons. The EV-to-EBITDA multiple of 18.72x and EV-to-sales ratio of 4.57x suggest the market is valuing the company’s revenue potential whilst heavily discounting near-term profitability.
Price to Book Value
1.73x
Below sector average
P/E Ratio (TTM)
NA
Loss building
Dividfinish Yield
0.34%
₹1.00 per share
Mojo Score
36/100
SELL rating
The proprietary Mojo score of 36 out of 100 places Praveg firmly in “SELL” territory, reflecting concerns about technical trfinishs, earnings volatility, and negative five-year EBIT growth of -1.85%. The stock’s high beta of 1.50 indicates it is significantly more volatile than the broader market, amplifying both upside potential and downside risk.
Shareholding: Institutional Exodus Signals Caution
The shareholding pattern reveals concerning trfinishs in institutional confidence. Promoter holding has remained relatively stable at 45.94% in December 2025, with a modest sequential increase of 0.44 percentage points. However, institutional investors have been steadily reducing exposure.
| Shareholder Category | Dec’25 | Sep’25 | Jun’25 | Mar’25 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 45.94% | 45.50% | 45.50% | 45.50% | +0.44% |
| FII | 3.47% | 5.01% | 5.48% | 10.57% | -1.54% |
| Mutual Funds | 0.00% | 1.22% | 2.24% | 2.09% | -1.22% |
| Insurance | 0.00% | 0.00% | 0.80% | 1.96% | 0.00% |
| Other DII | 4.85% | 4.82% | 4.61% | 0.16% | +0.03% |
| Non-Institutional | 45.74% | 43.45% | 41.37% | 39.73% | +2.29% |
Foreign institutional investors (FIIs) have slashed their stake from 10.57% in March 2025 to just 3.47% in December 2025, a reduction of 7.10 percentage points over three quarters. This represents a significant vote of no confidence from sophisticated foreign investors who typically conduct thorough due diligence before investing in micro-cap stocks.
Even more concerning, mutual fund holdings have been completely eliminated, declining from 2.24% in June 2025 to zero by December 2025. Insurance companies have similarly exited their positions entirely. The total institutional holding now stands at just 8.32%, down from significantly higher levels earlier in the year, indicating widespread institutional scepticism about the company’s near-term prospects.
The only positive development has been the increase in non-institutional holdings to 45.74%, suggesting retail investors may be attempting to accumulate shares at depressed valuations. However, the exodus of professional investors raises questions about whether retail enthusiasm is misplaced optimism or a contrarian opportunity.
Stock Performance: Severe Underperformance Across All Timeframes
Praveg’s stock performance has been dismal across virtually all timeframes, significantly underperforming both the Sensex and the broader hotels and resorts sector. The stock has declined 53.73% over the past year whilst the Sensex gained 9.85%, resulting in negative alpha of 63.58 percentage points.
| Period | Praveg Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | 2.01% | 0.43% | +1.58% |
| 1 Month | -1.01% | -0.24% | -0.77% |
| 3 Months | -7.99% | -0.94% | -7.05% |
| 6 Months | -32.78% | 4.29% | -37.07% |
| 1 Year | -53.73% | 9.85% | -63.58% |
| 2 Years | -67.50% | 17.73% | -85.23% |
| 3 Years | -33.14% | 37.89% | -71.03% |
The stock has underperformed the hotels and resorts sector by 37.75 percentage points over the past year, with the sector declining 15.98% compared to Praveg’s 53.73% fall. This significant sector underperformance suggests company-specific concerns beyond broader industest headwinds.
The risk-adjusted return of -1.18 combined with volatility of 45.62% places Praveg in the “HIGH RISK LOW RETURN” category. The stock’s beta of 1.50 indicates it is 50% more volatile than the market, amplifying losses during downturns. All relocating averages (5-day, 20-day, 50-day, 100-day, and 200-day) are above the current price, indicating strong technical resistance at multiple levels.
The technical trfinish classification of “MILDLY BEARISH” as of February 9, 2026, following an extfinished period of bearish trfinishs dating back to July 2025, suggests limited near-term upside momentum. The stock faces immediate resistance at the 20-day relocating average of ₹288.24 and major resistance at the 100-day relocating average of ₹319.43.
Investment Thesis: Quality Company, Questionable Timing
Praveg’s overall quality grade of “GOOD” reflects strong long-term financial fundamentals, including an impressive average ROE of 28.25%, healthy five-year sales growth of 26.71%, and conservative leverage with a debt-to-equity ratio of just 0.22. The company operates with no promoter pledging, indicating confidence from the founding family.
Valuation Grade
Attractive
Post-correction discount
Quality Grade
Good
Strong fundamentals
Financial Trfinish
Positive
Q3 improvement
Technical Trfinish
Mildly Bearish
Weak momentum
However, the short-term financial trfinish classification of “POSITIVE” based on Q3 FY26 results conflicts with the concerning nine-month cumulative loss and the negative five-year EBIT growth of -1.85%. The company’s inability to generate consistent quarterly profitability remains the primary concern, with operating profit expansion failing to keep pace with revenue growth over the medium term.
The current Mojo score of 36 out of 100 reflects the challenging combination of weak technical trfinishs, earnings volatility, and institutional selling pressure. The score has remained in “SELL” territory since early May 2025, briefly improving to “HOLD” before reverting to “SELL” status.
Key Strengths & Risk Factors
✓ KEY STRENGTHS
- Exceptional ROE: Average ROE of 28.25% demonstrates superior capital efficiency and strong returns on shareholder equity
- Strong Revenue Growth: Five-year sales CAGR of 26.71% displays robust demand for experiential hospitality offerings
- Conservative Leverage: Debt-to-equity ratio of 0.22 and debt-to-EBITDA of 0.92 indicate prudent financial management
- Peak Season Strength: Q3 revenue of ₹90.45 crores and operating margin of 29.02% demonstrate strong pricing power during peak tourism periods
- No Promoter Pledging: Zero pledged shares indicates promoter confidence and reduces governance concerns
- Attractive Valuation: P/BV of 1.73x at significant discount to sector peers following 53.73% price correction
- Niche Positioning: Focus on luxury tent resorts and experiential hospitality provides differentiation in growing segment
⚠ KEY CONCERNS
- Extreme Earnings Volatility: Consecutive quarterly losses in Q1 and Q2 FY26 followed by profit in Q3 highlights unpredictable earnings pattern
- Negative EBIT Growth: Five-year EBIT CAGR of -1.85% indicates operating profit has not kept pace with revenue expansion
- Deteriorating ROCE: Latest half-yearly ROCE of 2.30% represents sharp decline from historical average of 37.76%
- Institutional Exodus: FII holdings down from 10.57% to 3.47%, mutual funds completely exited, signalling loss of professional investor confidence
- Trailing Losses: Loss-building on TTM basis prevents meaningful P/E valuation and limits institutional acquireing interest
- Declining Cash Position: Cash balances at ₹10.85 crores in H1 FY26, lowest level, raises working capital concerns
- High Volatility: Beta of 1.50 and volatility of 45.62% creates significant price risk for investors
Outview: What to Watch
POSITIVE CATALYSTS
- Q4 Performance: Another strong quarter in the January-March period could establish consistent profitability pattern
- Full-Year Profitability: Achieving positive net profit for FY26 would restore investor confidence in business model
- Margin Sustainability: Maintaining operating margins above 25% across multiple quarters would validate pricing power
- Institutional Re-Entest: Return of mutual fund or FII acquireing would signal improved sentiment
- ROCE Recovery: Improvement in half-yearly ROCE above 15% would indicate capacity expansion is yielding returns
RED FLAGS
- Q1 FY27 Losses: Another loss in the April-June quarter would confirm persistent seasonal challenges
- Further Institutional Selling: Continued reduction in FII/DII holdings below current 8.32% would be highly negative
- Margin Compression: Operating margins falling below 20% in peak quarters would indicate competitive pressures
- Rising Leverage: Debt-to-equity ratio increasing above 0.40 would raise financial risk concerns
- Cash Flow Stress: Operating cash flow turning negative or requiring equity dilution for expansion
The Verdict: Quality Business, Poor Entest Point
SELL
Score: 36/100
For Fresh Investors: Avoid initiating positions despite attractive valuation. The combination of extreme earnings volatility, institutional selling, negative EBIT growth, and weak technical trfinishs creates unfavourable risk-reward dynamics. Wait for evidence of consistent quarterly profitability and stabilisation of institutional holdings before considering entest.
For Existing Holders: Consider reducing positions on any technical bounce towards ₹320-₹330 levels. Whilst the company possesses strong long-term fundamentals with impressive ROE and conservative leverage, the near-term outview remains clouded by seasonal unpredictability and deteriorating capital efficiency. The institutional exodus and trailing losses limit upside potential until business model sustainability is proven.
Fair Value Estimate: ₹250-₹280 (15% downside risk from current levels), based on 1.5x P/BV applied to book value of ₹169.38, discounted for earnings volatility and execution risks.
Note- ROCE = (EBIT – Other income)/(Capital Employed – Cash – Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before building any investment decisions. Past performance is not indicative of future results, and all investments carry risk of loss.
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