Tata Group-backed small-cap hotel stock delivered over 500% returns in three years

Shares of Benares Hotels Limited gained about 6% today. The stock has witnessed heavy buying activity from investors. The Indian Hotels Company Limited holds the majority stake in the company. Recently, the company announced that it will add a 100-room tower with larger rooms and take the total inventory to 230 rooms at Taj Ganges, Varanasi. This will further help the company to boost its revenue.

Benares Hotels Limited has delivered multi-fold returns to its shareholders in the last three years. During this period, the company’s share price surged from Rs 1250 on December 24, 2020, to Rs 8710 on December 20, 2023, representing an increase of over 500% in a three-year holding period. An investment of Rs 1 lakh in this company’s shares three years ago would have grown to Rs 5 lakh today.

Financial Performance

In Q2FY24, the company posted 46.22% growth in its consolidated revenue at Rs 25.90 crore compared to Rs 17.72 crore from the previous year’s corresponding quarter. The operating profit of the company stood at Rs 10.70 crore, while the PAT of the company stood at Rs 6.84 crore, representing an impressive growth of 130.44% YoY.

Business Overview

Benares Hotels Limited (BHL) was established in 1971. The company operates its hotels, i.e. Taj Ganges and Taj Nadesar Palace in Varanasi and The Gateway Hotel, Gondia in Maharashtra. It became a subsidiary of The Indian Hotels Company Limited in 2011. Taj has been recognized as the World’s Strongest Hotel Brand and India’s Strongest Brand across all sectors by Brand Finance 2022. Two of BHL’s hotels are branded as Taj.

Stock Price Movement

Today, the stock opened at Rs 8,230, with a high and low of Rs 8,799 and Rs 8,230, respectively. The stock closed trading at Rs 8,615.25, which increased by 5.03%. The stock has a 52-week high of Rs 8,903 and a 52-week low of Rs 2,528. The company has an ROCE of 34.2% and an ROE of 26.3%, with a market capitalisation of Rs 1,127 crore.

The stock has shown impressive growth, and investors should keep a close eye on this stock.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.