Up 54,000% in 5 years! Can Ayodhya Ram Mandir, Vibrant Gujarat, Lakshadweep tourism lift this multibagger stock further?

Ram Mandir's inauguration in Ayodhya, Vibrant Gujarat Global Summit 2024 and India's new latest travel fantasy for Lakshadweep Islands have been drawing the majority of headlines lately. Interestingly, one stock in Dalal Street is beneficiary of all three key events and has been hogging the limelight.

The counter has delivered an astounding return of 54,000 per cent in the last five years, hitting Rs 1,300 mark on Wednesday, January 10, 2023 from a level of Rs 2.40 in January 2.40 in January, 2019. This means an investment of Rs 10,000 in the company yielded a profit of more than Rs 54 lakh.

The stock, being discussed here is Praveg, which hit an all-time high of Rs 1,300 apiece. The latest disguised proxy-play of the Indian tourism sector has been on the radar of traders as the stock has rallied about 330 per cent in the last one year, while it has gained about 75 per cent in the year 2024 so far. Its total market cap was merely shy of Rs 3,000-mark on Wednesday.

Ahmedabad-based Praveg Ltd has a strong leadership across diverse business segments like exhibition management, event management, tourism & hospitality and publication. The company provides luxury tent cities and luxury resorts at multiple places including Ayodhya, Rann of Kutch, Varanasi, Daman & Diu and Sardar Sarova among others.

In December 2023, Praveg announced that it had received the work order for the development, operation, maintenance, and management of at least 50 tents at Agatti Island of Lakshadweep,

with a cloakroom, changing room, along with commercial activities like scuba diving, destination wedding, corporate functions, and many more facilities. The work order was for a period of three years that could be extended up to another two years. With this recent expansion, Praveg now boasts a substantial portfolio of 580 operational rooms spread across multiple states.

By combining luxury with eco-responsibility and highlighting the unique cultural and natural aspects of Agatti Island, Praveg aims to solidify its position in the hospitality industry and attract travelers seeking a distinctive and sustainable getaway," said Vishnu Patel, Chairman of Praveg, who is projecting 55-60 per cent occupancy with an average room rate of Rs 9,500-12,500.

Analysts tracking the counter said that stocks like Praveg are not meant for all investors and investors only with very high-risk appetite, who can risk a substantial portion of their investment should bet on these counters. Such stocks work like a lottery ticket, they caution.

Kranthi Bathini, Director of Equity Strategy, WealthMills Securities said that Praveg is being one of the beneficiaries of revenge spending in the tourism sector. Such companies have a low cost of operations and have higher margins, which support such rapid move in the stock.

Valuations look very stretched following the recent run-up and euphoria around tourism push in Lakshadweep and Ram Mandir in Ayodhya. The stock has been rallying rampantly on the back of events lined-up in their area of operations but one needs to look at valuations as well, he cautioned.

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