This is a presentation on "The Byke Hospitality Ltd.,". It is not a stock recommendation. It is a case study on how I pick stocks. The facts presented are as on 1st July, 2017. I hold this stock in my portfolio.
2. Asset light model in asset
intensive business. 8% lease
expense. Acquisitions only if
cost < 25% of annual revenue.
No debt or equity dilution for
growth. Low capital expenditure
leading to high return ratios
(30%+ RoCE) and high cash flow.
Tie-up with 300+ travel agents
and growing. Strong presence in
B2B chartering business. Enable
occupancy optimization in both
segments.
Value
Proposition
2
3. B2B Room chartering is a
low margin trading like
business. Margins are
shared with agents and it
is high working capital
intensive.
Room rentals, Event
Hosting and F&B are high
margin businesses.
Branding, presence in
multiple locations,
corporate networking are
key.
Room chartering helps in
understanding the industry
better. It enables
networking with hotel
owners for negotiating
lease. It helps efficient
deployment of cash till a
deal is made.
Business
Model
Room Rentals Event Hosting Food &
Beverages Room Chartering
Franchise Model Online Aggregator
3
6. The company maintains
amazing financial
discipline. Their growth is
funded by cash flow. It
never depends on debt or
equity dilution to fund its
growth.
Though there is
opportunity for increasing
the working capital and
growing RC business, it
avoids debt.
Company is cautious of not
over paying. Maintains
lease cost < 8%. The
business model also helps
in effective usage of
working capital.
Financials
6
14. Exits
Exits like
would dent growth.
Scalability
Scalability beyond a level
might not be possible.
Branding Failure
Trip advisor ratings doesn’t
seem too good. Brand
value might not be high
enough to start franchise
model.
Risks
14
Competition
“OYO” kind of aggregators
posing a competition.
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