Arambhan Hospitality Services Ltd (Formerly, Cawasji Behramji Catering Services Limited)

cbcs-logoUpdated on July 14, 2016: The company’s name has changed to Arambhan Hospitality Services Ltd from Cawasji Behramji Catering Services Limited.

Founded in 1944, Cawasji Behramji Catering Services Limited (CBCS) has grown to be the market leader in the offshore, Oil & Gas, Catering Industry. It is also into restaurant business under the brand name “MeSoHappi”. CBCS is a part of the Arambhan Group, Founded by Alfred Arambhan, a ‘first generation’ entrepreneur. The Arambhan Group is one of India’s most highly reputed companies operating in the following areas of Shipping, Clearing & Forwarding, Investment Banking, Real Estate Development, Home Land Security, Entertainment, etc.

Services

Its present business composition can be categorised into the following divisions:

Offshore catering & housekeeping services: They provide food catering & housekeeping services to various Indian and International shipping and oil exploration companies. They operate and manage staff cafeterias, on a contract basis, at the premises of its corporate clients on different locations. Company provides services on locations such as Offshore Barges, Rigs, Diving Vessel, Supply Vessels and Remote Production.

Onshore catering services: They provide food catering services to its corporate clients, banquets, parties & events and gymkhanas. Under this division, they operate and manage services, on a contract basis, at the premises of its clients.

Fine Dining Restaurant: They operate a dedicated restaurant under the brand of “MeSoHappi”. Its eatery restaurant offers a fun-dining experience with its service focusing on providing consumers with quality social engagement, fun and plays along with quality food and service in modern ambience.

Why invest?

  • The company has more than 50% market share in Offshore Catering Industry.
  • The promoters have extensive experience running into decades of serving clients such as L&T, Essar, Punj Lloyd, ONGC, Leighton Welspun, Kreuz, Hind Offshore, etc.
  • High Promoter shareholding of 73.40% as of March, 2016.

Valuation/ Price?

The net profit for FY 2015 stood at 0.82 Cr which was less on account of subdued crude oil exploration activities. Accordingly, it is available at a PE of approx. 15.70 (Current Market Price is Rs. 25.75). Looking at the net profit for the prior two years (2.22 Cr. and 2.65 Cr.), it appears that the company is available at a price much below its intrinsic value.

Given the promoter background, client profile and market leadership, CBCS can give good returns over the years.

5 thoughts on “Arambhan Hospitality Services Ltd (Formerly, Cawasji Behramji Catering Services Limited)

  1. Appreciate your research!!!! having few issued in Arabhan !!!!!

    1. Drs on 31.03.15 – 32.16 Cr against Sale of 63.07 Cr – Almost 45% Sales is o/s.

    2. Cash In hand – 1.49 Cr – Abnormaly High
    3. Fixed Asset – Gross Block Of Rs.6.31 Cr, Rs.2.00Cr is of Car
    4. in Revenue – Spoliage of Provision is Rs.2.11 Cr for which no further disclosure is given
    5. Loans O/s.- Rs.18.27 Cr against Equity Fund of Rs.11.84 Cr as on 31.03.2015.

    Although I found this company as one of best candidate for investment on SME platform, thought to share my above concerns with experts like you for discussion for benefit of all of us.

    • Hi Ruchir. High receivables is surely a concern here. However, the same can not be linked with cash in hand as they do need to keep such amounts of cash because of high working capital requirements. See, cost of car may seem to be high in itself but comparing it with their overall fixed costs can be misleading. This is because their business model is very less capital intensive and their main costs are with respect to material and manpower. Regarding the provision, I do not think it is too big a concern, given their nature of business. Lastly, with respect to the loans, I understand that the debt to equity ratio is high but given their leadership position and client profile I believe there is a lot of room to grow when oil exploration activities pick up pace again. At that time they will again get back to healthy interest coverage ratios that they used to enjoy in good times. In essence they are facing temporary cash flow issues right now but I believe it will get better as we move ahead.

      • They have closed the two hotels in nov 29th right, and they were loss making investments, is it a positive move? and now the stock is available close to 52w low, risk reward favorable?

Leave a Reply

Your email address will not be published. Required fields are marked *

*