Aruna Hotels Limited

Consumer Cyclical — Lodging · BSE

₹7.19+₹0.16 (+2.28%)

DalalBaazaar Score

48 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by high debt relative to equity, short-term liabilities exceed short-term assets, negative free cash flow.

In simple words: The business is earning a fairly low return on the money invested in it, but sales are shrinking. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:08 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

The 60-second version of Aruna Hotels Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Aruna Hotels Limited engages in developing, owning, acquiring, renovating, operating, managing, and promoting hotels, restaurants, etc in India.

IndustryLodging

SectorConsumer Cyclical

Employees14

Annual revenue₹25 Cr

How does it make money?

Turns over ₹25 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹80 left at the operating level before interest, tax and depreciation. Each of its 14 employees supports ₹1.79 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin80.3%

Net margin3.2%

Revenue / employee₹1.79 Cr

Who are its competitors?

The closest listed comparisons in its industry are MARUTI SUZUKI INDIA LTD., TITAN COMPANY LIMITED, TRENT LTD, AVENUE SUPERMARTS LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

MARUTI SUZUKI INDIA LTD.P/E 25.2x · ROE 13.4%

TITAN COMPANY LIMITEDP/E 68.5x · ROE 36.7%

TRENT LTDP/E 87.2x · ROE 25.9%

AVENUE SUPERMARTS LIMITEDP/E 69.9x · ROE 12.7%

What is its competitive advantage?Little sign of one

Returns on capital of 10.5% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

ROCE10.5%

ROE2.9%

Peer median ROE25.9%

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +1224% while net margin moved -101% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+1224%

Margin effect-101%

DalalBaazaar Score

48/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Debt/Equity of 4.40x is high — earnings must service borrowings before shareholders see anything
✗ Current ratio of 0.45 — short-term liabilities exceed short-term assets
✗ Free cash flow is negative — growth is being funded by borrowing or fresh equity
✗ Interest cover of only 1.2x — little room if profits dip

Quality vs. Valuation

Company Quality

46/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

75/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

30.0x

1.3Y Median

27.6x

16 monthly readings · mean 27.1x · range 22.7x–30.5x

Sector Median

69.2x

median of 4 sector peers

🟡Currently trading close to its 1.3y median of 27.6x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 57% below the peer median of 69.2x.

vs. its own history

Fair

27.6x median over 16 months · +8%

vs. sector peers

Cheap

69.2x median of 4 peers · -57%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

30.0x

P/B

0.90x

EV/EBITDA

7.0x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well2

Return on equity is rising
ROE has improved from -28.8% to 2.9%.
Return on capital is rising
ROCE has improved from 0.4% to 10.5%.

🔴 What Needs Attention3

Margins are compressing
EBITDA margin has slipped from 1038.9% to 80.3% over 3 years.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Short-term liquidity is tight
Current ratio of 0.45 — near-term obligations exceed near-term assets.

Red Flags

5 items require attention · 3 high · 2 watch

🔴High leverageFinancial
Debt/Equity of 4.40x — earnings must service borrowings before shareholders see anything.
🔴Thin interest coverageFinancial
Operating profit covers interest only 1.2x — little room if earnings dip.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 958.6 points, from 1038.9% to 80.3%.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹4 Cr in the latest year.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.45 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 57% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 1038.9% to 80.3%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The debt load needs earnings to hold up
Debt is 5.9x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
3 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 102% a year✓ 136.6% CAGR
Latest reported year was -2.9%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 78%✓ 80.3%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 5.9x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Free cash flow remains positive✗ -₹4 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✗ 1.2x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

2 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✗ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

2 good · 4 neutral · 5 weak

Market Cap

₹24 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

30.0x

Fair

Fairly valued against the generic band

P/B Ratio

0.90x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹0.24

Profitable

Profitable on a per-share basis

ROE

2.9%

Weak

Weak capital efficiency

ROCE

10.5%

Moderate

Moderate return on the capital in the business

Debt/Equity

4.40x

High

High leverage

Revenue Growth (YoY)

-2.9%

Shrinking

Sales are contracting

Profit Growth (YoY)

-21.8%

Falling

Profits are shrinking

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹4 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹7.19

Operating Margin

14.1%

Average

Average margins

Net Margin

-7.5%

Weak

Very little revenue reaches the bottom line

Current Ratio

0.45

Tight

Tight short-term liquidity

Beta (vs Nifty)

-0.17

Defensive

Steadier than the market

52W Range Position

34%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

7.2 / 7.3

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

50.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2 Cr	₹15 Cr	₹24 Cr	₹25 Cr	+136.6%
EBITDA	₹20 Cr	₹14 Cr	₹17 Cr	₹20 Cr	+0.8%
EBITDA Margin	1038.9%	94.8%	72.7%	80.3%	—
PAT (Net Profit)	-₹9 Cr	-₹4 Cr	₹1 Cr	₹1 Cr	—
EPS	₹-2.63	₹-1.33	₹0.31	₹0.24	—
ROE	-28.8%	-16.9%	3.8%	2.9%	—
ROCE	0.4%	6.3%	8.9%	10.5%	—
Total Debt	₹122 Cr	₹121 Cr	₹119 Cr	₹118 Cr	-0.9%
Free Cash Flow	-₹14 Cr	₹4 Cr	₹16 Cr	-₹4 Cr	—

🟢 Revenue has grown at 136.6% a year over 3 years.

🟡 EBITDA has been broadly flat over 3 years (0.8% a year).

🔴 EBITDA Margin has fallen from 1038.9% to 80.3% over 3 years (-958.6 pts).

🟢 PAT (Net Profit) has turned positive, from -₹9 Cr to ₹1 Cr.

🟢 EPS has turned positive, from ₹-2.63 to ₹0.24.

🟢 ROE has risen from -28.8% to 2.9% over 3 years (+31.6 pts).

🟢 ROCE has risen from 0.4% to 10.5% over 3 years (+10.1 pts).

🟡 Total Debt has been broadly flat over 3 years (-0.9% a year).

Balance Sheet & Cash Flow — FY2026

Total Assets

₹185 Cr

Total Liabilities

₹157 Cr

Total Debt

₹118 Cr

Cash & Equivalents

₹2 Cr

Operating Cash Flow

₹1 Cr

Capex

-₹5 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

70.5%

Peer Comparison

Company	P/E	ROE
MARUTI SUZUKI INDIA LTD.	25.2x	13.4%
TITAN COMPANY LIMITED	68.5x	36.7%
TRENT LTD	87.2x	25.9%
AVENUE SUPERMARTS LIMITED	69.9x	12.7%

Recent News

1 mixed1 negative4 general

Aruna Hotels Ltd Falls to 52-Week Low of Rs 6.16 as Sell-Off Deepens

MarketsMojo, 15 Oct

Aruna Hotels shareholders approve all AGM resolutions with 98% support

scanx.trade, 25 Sept

Aruna Hotels standalone net profit declines 62.75% in the March 2026 quarter

Business Standard, 28 MayResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

TGB Banquets And Hotels Ltd. (TGBHOTELS) Share Price Surges 12.34% Today

Univest, 27 JulPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

ARUNA HOTELS LTD. Share Price

Upstox, 04 Apr

Aruna Hotels inaugurates renovated Annex Building in Chennai

scanx.trade, 07 Sept

Watch Items

Revenue growth is negative (-2.9%) on the latest reported period — check if this is one-off or a trend.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟡Business QualityAdequate11.8/20

🔴Financial HealthStretched3.9/20

🟢GrowthStrong13/20

🔴ProfitabilityWeak5.9/15

🟡ValuationFair9.5/15

🔴RiskHigh3.7/10

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 3 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 102% a year136.6% CAGR
✓EBITDA margin holds above 78%80.3%
✗Debt / EBITDA falls below 3x5.9x
✗Free cash flow remains positive-₹4 Cr
✗Interest cover stays above 3x1.2x