Gujarat Hotels (507960)

Score breakdown: P/E: 2/3 · ROCE: 1/2 · Growth: 0/2 · Dividend: 0/1

Key Financials

Strengths

• P/E of 12.53 and P/B of 1.75 provide a moderately reasonable entry valuation for a small-cap.
• ROE of 12.78% and ROCE of 14.98% are respectable for a hotel business.
• A dividend yield of 1.58% shows some return to shareholders despite the earnings dip.
• Positive book value of ₹123.64 per share offers a tangible asset cushion.

Concerns

• Sales and profit are both declining around 9%, showing deteriorating operating momentum.
• Piotroski F-Score of 3/9 signals weak financial health and potential distress signals.
• Latest quarter shows sales of ₹1 Cr and net profit of ₹1 Cr, making earnings quality difficult to trust.
• Debt/equity and promoter holding are unavailable, and the FairStock Score is insufficient due to lack of data.

AI Analysis

Let me look at Gujarat Hotels the way I would look at any business. It is a small hotel company—₹82 crore market cap—operating in a cyclical, capital-heavy industry. At ₹216.45, the stock trades at 12.53 times earnings and 1.75 times book value, against a book value of ₹123.64. That is not a deep Graham discount. The earnings behind the multiple are shrinking: sales fell 9.22% and profit fell 9.15%. ROE of 12.78% and ROCE of 14.98% are acceptable, but they do not suggest a strong moat. Hotels need pricing power or a unique location; I see no evidence of such an advantage here. The Piotroski F-Score of 3 out of 9 is troubling. It points to weak financial health. The latest quarter shows sales of ₹1 crore and net profit of ₹1 crore. When profit equals revenue, I question the quality of earnings—either rounding is masking the operating picture, or non-operating income is doing the heavy lifting. Either way, I cannot call this stable. Debt-to-equity is not available, so I cannot judge leverage, and the FairStock score also says insufficient data. That lack of transparency is itself a warning. A 1.58% dividend yield provides small comfort, but it does not compensate for declining operations and an unclear balance sheet. The share has ranged from ₹165.50 to ₹318.90 in a year; it is now in the middle. That price action is typical of a cyclical, not a compounder. I prefer a wonderful business at a fair price, as Buffett says, rather than a fair business at a seemingly cheap price. Until I see sales growth and profit growth turn positive, and the financial health score improve, I will not buy. A cheap-looking hotel can become cheaper.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer