Recommendation Review: The Byke Hospitality

We had recommended The Byke Hospitality in DSIJ Vol. 28, Issue No. 15 (dated July 1, 2013), when it was trading at a price of Rs 257. The primary reason behind recommending this counter was that the company remains highly insulated from rupee depreciation, which has been acting as a spoilsport for the market of late despite the RBI’s intervention.

Post our recommendation, the company also came with a good set of quarterly numbers, wherein its sales have increased by 57 per cent to Rs 29 crore. The net profits have risen by 3.7x to Rs 3 crore. The company’s EBITDA margins have also gone up from 13 per cent in June quarter of the last fiscal to 19 per cent in the recent quarter. This indicates a very strong performance.

When we recommended The Byke Hospitality to our readers, the Sensex was at 18629. Following the bearish sentiment in the market, the Sensex has skid by two per cent till date from our recommendation, whereas this stock has gained 5.5 per cent. It should be noted that the company has also announced a dividend of Rs 1 per share, which takes the total gain to six per cent. These are surely good returns in a mere one and a half month period in the current market scenario. We believe that this is a good time to book partial profits in the stock and hold the rest, as we expect the company to gain further from the good sentiment over its robust Q1 results.