Panoramic Universal - 148.00 Rs

Incorporated in 1991 and promoted by Sudhir Moravekar, Panoramic Universal Ltd. (PUL) is the flagship company of Panoramic group which has diversified business interest in hotels, clubs, resorts, entertainment, real estate, herbal healthcare products, specialty food, advertising, BPO and Information Technology. However PUL derives 80% of its revenue from hospitality and the balance 20% from the IT business. Earlier known as IT Microsystem, PUL was mainly a software company till 2003 with core competencies in customized software application development, e-business applications, legacy and client/server systems, supply chain management solutions, ERP, IT Education & Training. It has presence in USA, UAE, China and New Zealand and has a 100% software export unit in Mumbai equipped with state-of-the-art infrastructure. Some of the software developed by the company includes software for Payroll, Human Resource Management Software (HRMS), Co-operative Housing Society Accounting, Multilevel/Network Marketing, Sales & Distribution, Hotel/Club Management Software etc.

But interestingly in 2003, PUL diversified into hotel business and today it’s a well-known hospitality company with presence in USA, New Zealand and India. Currently, through its subsidiaries it owns and operates 5 hotels in USA –The Georgian Resort, New York (164 rooms), Quality Inn, New York (142 rooms), Holiday Inn, Ohio (239 rooms), United Inn, North Carolina (125 rooms), Comfort Inn, North Carolina (126 rooms) whereas in New Zealand it owns a small motel called Sai Motels (22 rooms). Notably, PUL is the only company besides Indian Hotels and East India Hotels to own and manage star category hotels outside India. In India it has three hotels i.e. at Shirdi, Goa and Malvan. In short it has total room strength of 902 rooms. The company also owns “Pancard Club Hotel and Resort in Baner Hills along with ‘Area 51’, a large entertainment lounge in Pune.

For future growth, PUL has chalked out capex plans of Rs.1000 cr. for the next 3-5 years. It has plans to develop three 5 star hotels of 250-300 rooms each in Pune, Kerala and Goa. It has already bought land in Pune and Kerala for the same and is looking to finalize the land at Goa. It also intends to set up or acquire five 3 star hotels (of 150-200 rooms) in Tier II cities like Jaipur, Chandigarh, Bangalore etc. Meanwhile, it has already launched two 3 star hotel-cum-club projects one each at Thane and Durgapur to be operational within two years. Recently, the company has acquired 100% stake in M/s. Sri Vatsa Hotels Pvt. Ltd. at cost of Rs.18 cr. to construct a 3 or 4 star hotel with approximate 90 rooms at its premises located in the heart of Secunderabad. As a step towards backward integration, PUL has diversified into the realty sector by acquiring 100 % stake in Ambitious Infrastructure Pvt. Ltd. and has a land bank of more than Rs.200 cr. across Pune, Thane, Mahabaleshwar, Karjat and Durgapur. Moreover, the management wants to acquire 20 properties in USA and India in the next 3 years and has plans to enter the Europe and Australian hotel markets in future.

Besides real estate and hospitality, PUL is looking at acquisition of a travel agency and setting up travel portal for e-ticketing and hotel bookings to become an end to end player in the travel & tourism industry. In future, it wants to cash in the Medical tourism boom by setting up Ayurvedic medical cum relaxing facility. Interestingly, the company has acquired the franchise for ‘The Country's Best Yoghurt’ (TCBY) and has set up a manufacturing unit at Silvassa. It has also signed a MoU with Natham's Place (a US food retail chain) to open exclusive outlets in India. The promoters intend to consolidate assets of the Panoramic Group with PUL to create a single holding company and bring all its hotel properties in USA and India under the 'United Inn' brand. Thus with these strategic initiatives, PUL is on its way to emerge as a hospitality conglomerate by expanding its hotel bases across geographies.

As most the business is through subsidiaries, one should evaluate the company by its stand-alone numbers. On a consolidated basis, it is expected to end FY07 with total revenue of Rs.130 cr. and profit of Rs.35 cr. i.e. EPS of Rs.27 on its equity of Rs.6.48 cr. with FV of Rs.5 per share. This means that the scrip is trading at a P/E ratio of merely 5.5 against its current earnings. However, to fund its expansion plan, the company may take huge debt or dilute its equity substantially in future. Still 74% promoter holding gives some confidence in the group and investors are advised to buy at current levels with a price target of Rs.220 in the medium-term. If things pan out as per plans, then it may turn out to be a multi-bagger in the long run.