The Leela Inns IPO, Schloss Bangalore IPO: Because the hospitality panorama in India continues to evolve, Schloss Bangalore Ltd which is the esteemed operator behind the enduring The Leela Palace & Inns model is poised to enter the capital market with its Preliminary Public Providing (IPO).
The share sale window of the hospitality sector agency will open on Could 26, 2025, with a value band of Rs 413 to Rs 435 per share.
With a complete subject dimension of Rs 3,500 crore, the problem contains a contemporary subject of Rs 2,500 crore and an offer-for-sale (OFS) value Rs 1,000 crore. The IPO is scheduled to shut on Could 28, 2025.
However past this, the query is ought to buyers apply for this subject or not? Right here is an in-depth have a look at the IPO particulars and analysts’ suggestions.
Allocation construction
When it comes to allocation, 75 per cent of the shares are reserved for Certified Institutional Consumers (QIBs), 15 per cent for Non-Institutional Consumers (NIBs), and the remaining 10 per cent for retail class.
Overview of the Leela Inns
Schloss Bangalore operates 13 luxurious inns throughout India, with a portfolio of three,553 keys beneath The Leela Palaces, Inns & Resorts model.
The corporate adopts an asset-light mannequin, with solely 5 owned and managed properties, 7 beneath administration contracts and 1 beneath a franchise mannequin.
As of December 2024, the corporate has a presence in all 7 enterprise markets and three of the 5 leisure markets within the nation. The corporate accounts for practically 18 per cent of the posh lodge keys in these markets.
Do you have to subscribe to the IPO?
Analysts at Bajaj Broking have stated that the IPO is extra of a “turnaround and brand-led progress story” than a value-driven wager. The premium valuation already costs in future optimism.
“Buyers ought to be cautious, recognising that this IPO is essentially a wager on a turnaround and brand-led progress story, relatively than a price play primarily based on present fundamentals,” the brokerage stated.
Regardless of this, Bajaj Broking suggests subscribing with a long-term view.
Based on Bajaj Broking, the corporate has a damaging EPS (Rs –0.12) and a damaging internet asset worth (Rs –160.57) that make valuation metrics like P/E and RoNW inapplicable or deceptive.
“This locations it at a major valuation premium to listed friends like Indian Inns and EIH, each of that are constantly worthwhile,” based on Bajaj Broking analysts.
Analysts at Anand Rathi have beneficial subscribing to the IPO with a long-term perspective, citing the corporate’s model positioning and operational technique.
“Schloss Bangalore has a number one luxurious hospitality model with wealthy heritage and world attraction, supported by marquee-owned inns in high-entry-barrier markets,” Anand Rathi’s analysts stated.
“The corporate’s complete luxurious ecosystem leads to diversified income streams, and it has a observe report of driving operational effectivity by way of an energetic asset administration strategy,” based on them.
Anand Rathi believes the IPO is pretty priced given the corporate’s long-term progress potential and market management within the luxurious hospitality section.
SBI Securities is constructive on the IPO with out ranking
Whereas SBI Securities has not offered an specific suggestion, it gives a largely constructive outlook on Schloss Bangalore’s fundamentals and prospects.
“On the higher value band, the corporate is valued at an FY25 EV/EBITDA a number of of 26.3x, primarily based on post-issue capital,” based on SBI Securities
“Schloss’s presence within the luxurious hospitality house positions it effectively for above-average sector progress within the coming years…IPO proceeds might be used to repay debt, decreasing the debt-to-equity ratio from 1.1x and enhancing general profitability.
“Whereas valuation is reasonably excessive, the word highlights enhancing monetary efficiency, sector tailwinds, and deleveraging plans as key positives,” SBI Securities’ analysts stated.
What are danger components in the event you spend money on?
Many analysts additionally highlighted a number of danger components associated to the Leela Resort:
The corporate has pledged sure belongings as collateral. Failure to satisfy debt obligations may result in seizure or pressured sale of those belongings.
Any delays in renovating or refurbishing present owned inns could harm operations and visitor expertise
Delays or points within the completion of latest properties may result in misplaced income alternatives
The enterprise closely is determined by the premium picture of “The Leela”. Any deterioration in model status may have an effect on revenues and future partnerships
Upcoming initiatives
Schloss Bangalore is increasing its portfolio with a number of under-development luxurious properties throughout the nation. Listed here are particulars of those enlargement plans of The Leela Inns & Palace:
Property & Location
Kind & section
Anticipated keys
Capex share (in Rs million)
Possession
Anticipated date to begin
Standing
FY25 ARR vary (in Rs per evening)
The Leela Palace, Agra
Palace, Heritage & Grandeur
99
4,419
100%
2028
Approvals pending, building to begin
Rs 46,000 – Rs 51,000
The Leela Palace, Srinagar
Palace, Hill Station
170
1,899
50%
2028
Approvals pending for renovation
Rs 28,000 – Rs 33,000
The Leela, Ayodhya
Resort, Non secular
100
2,997
76%
2028
Approvals pending
Rs 18,000 – Rs 23,000
The Leela, Ranthambore
Resort, Heritage & Grandeur
76
1,280
51%
2028
Approvals pending
Rs 49,000 – Rs 54,000
The Leela, Bandhavgarh
Resort, Wildlife
30
720
74%
2028
Approvals pending
Rs 48,000 – Rs 53,000
Anchor buyers
Previous to its IPO opening, the corporate has raised Rs 1,575 crore from anchor buyers.
The anchor portion acquired curiosity from a variety of home institutional buyers corresponding to HDFC Mutual Fund, ICICI Prudential Mutual Fund, Nippon India Mutual Fund, Mirae Asset Mutual Fund, Invesco Mutual Fund, and Aditya Birla Solar Life Insurance coverage. Whereas world buyers additionally confirmed thier curiosity, together with sovereign funds and overseas portfolio buyers (FPIs) like Suppose Make investments, Constancy, Norges Financial institution, Whiteoak, Lunate, UC Regents, TT Worldwide, and Ward Ferry.
Different particulars of the IPO
BRLMs: JM Monetary, BofA Securities, Morgan Stanley, JP Morgan, Kotak Mahindra Capital, Axis Capital, Citi, IIFL Capital, ICICI Securities, Motilal Oswal, and SBI Capital Markets
The minimal bid lot is about at 34 shares. The registrar for the IPO is KFin Applied sciences Ltd.
