The quality parameter reveals a mixed picture. Despite a negative financial performance in Q2 FY25-26, with a PAT of ₹-5.44 crores reflecting a fall of 165.1%, the company’s operating profit has grown at an annual rate of 30.32%. This suggests a healthy long-term growth trajectory. The return on capital employed (ROCE) is recorded at 14.3%, indicating an efficient use of capital relative to peers. However, the operating profit to interest coverage ratio for the quarter is at a low 1.31 times, signalling tighter financial cushioning against interest obligations.
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Valuation metrics for Kamat Hotels (India) present an attractive scenario. The enterprise value to capital employed ratio stands at 1.8, which is comparatively lower than the average historical valuations of its peers in the Hotels & Resorts industry. The price-to-earnings-to-growth (PEG) ratio is 0.3, reflecting a valuation that factors in the company’s profit growth potential. Over the past year, the stock has generated a return of 24.98%, significantly outperforming the BSE500 market return of 8.30%. This market-beating performance is further supported by a profit rise of 77.7% over the same period.
From a financial trend perspective, the stock’s returns over various periods highlight its long-term strength. While the one-month return shows a decline of 21.15%, the one-week return is positive at 3.46%. Year-to-date, the stock has returned 3.02%, compared to the Sensex’s 8.36%. Over longer horizons, the stock’s returns are notably robust: 24.98% over one year, 173.00% over three years, 633.59% over five years, and 412.65% over ten years, all surpassing the Sensex benchmarks for the respective periods. This indicates sustained investor confidence despite short-term fluctuations.
Technical indicators have played a significant role in the recent adjustment in evaluation. The technical trend has shifted from sideways to mildly bullish, supported by daily moving averages showing a mildly bullish signal. However, weekly and monthly MACD readings remain mildly bearish, while the Relative Strength Index (RSI) on both weekly and monthly charts shows no clear signal. Bollinger Bands indicate a mildly bearish trend on the weekly scale but sideways movement monthly. The KST oscillator and Dow Theory signals are mostly mildly bearish or neutral, with the On-Balance Volume (OBV) showing bullish momentum monthly. This mixed technical landscape suggests cautious optimism among market participants.
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Institutional participation in Kamat Hotels (India) has seen a marginal increase, with institutional investors raising their stake by 1.4% over the previous quarter to hold a collective 4.83%. This uptick in institutional ownership may reflect a growing confidence in the company’s fundamentals and long-term prospects, given these investors’ enhanced capability to analyse corporate financials and market dynamics.
In summary, the adjustment in evaluation for Kamat Hotels (India) is underpinned by a combination of factors. The company’s quality metrics show a blend of short-term challenges and long-term growth potential. Valuation remains attractive relative to peers, supported by strong profit growth and market-beating returns. Financial trends highlight resilience over extended periods despite recent quarterly setbacks. Technical indicators present a cautiously optimistic outlook with a shift towards mild bullishness. Together, these elements have contributed to the recent revision in the company’s score grade, reflecting a balanced and data-driven reassessment of its investment profile.
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