Velan Hotels Faces Financial Challenges Amid Stagnant Growth and High Leverage Ratio

Feb 24 2025 06:16 PM IST
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Velan Hotels has recently adjusted its evaluation, reflecting ongoing financial challenges amid flat performance in the third quarter of FY24-25. The company faces high leverage with a debt-equity ratio of 9.15 times and has reported the lowest figures in key financial metrics over the past five years.
Velan Hotels, a microcap player in the Hotel, Resort & Restaurants industry, has recently undergone an evaluation adjustment reflecting its current financial standing. The company reported flat financial performance for the third quarter of FY24-25, with key metrics indicating challenges in its operational efficiency. Notably, the debt-equity ratio stands at a significant 9.15 times, suggesting a high level of leverage that may impact its long-term stability.

Over the past five years, Velan Hotels has experienced stagnant growth, with net sales and operating profit showing minimal annual changes. The latest quarter's results reveal a PBDIT of Rs -0.31 crore and a PBT less OI of Rs -0.44 crore, both marking the lowest figures recorded. Additionally, the earnings per share (EPS) for the quarter was reported at Rs -0.14, further highlighting the company's financial hurdles.

Despite these challenges, the stock is currently positioned within a mildly bullish technical range, having shown some improvement in its technical indicators. The majority of shareholders remain promoters, indicating a stable ownership structure.

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