Sayaji Hotels Reports 87.76% PAT Growth Amid Ongoing Financial Challenges

Sayaji Hotels, a microcap player in the hotel, resort, and restaurant industry, has recently reported a turnaround in its financial performance after a challenging period. The company announced a positive profit after tax (PAT) of Rs 7.98 crore for the nine months ending September 2024, marking an impressive growth of 87.76%. Additionally, operating cash flow reached its highest level at Rs 47.62 crore, while net sales for the quarter stood at Rs 28.13 crore, reflecting a growth of 27.69%.
Despite these positive indicators, the company faces challenges in its long-term fundamentals. The average return on capital employed (ROCE) is currently at 11.6%, with a historical average of 8.57%. However, net sales have experienced a decline at an annual rate of 12.82% over the past five years, and the company has a high debt-to-EBITDA ratio of 3.50 times, indicating potential difficulties in servicing its debt.

While the stock has generated a return of 23.72% over the past year, profits have decreased by 9.1%. Notably, domestic mutual funds hold a mere 0.09% stake in Sayaji Hotels, suggesting a cautious approach towards the company's valuation and business outlook.