Leela Hotels IPO, Schloss Bangalore IPO: Schloss Bangalore Ltd, which operates the iconic brand Leela, will enter the capital market on Monday, May 26 with its initial public offering (IPO). The hotel company’s share sales window will open on 26 May 2025 at a price of Rs 413, Rs 413 per share, to Rs 435 per share. The total issuance size of the issue is Rs 35 billion, including a new issue of Rs 25 billion and a quote worth Rs 100 billion (OFS). The IPO is scheduled to be closed on May 28, 2025.
Allocation structure
In terms of distribution, 75% of the shares are retained to qualified institutional buyers (QIBs), non-institutional buyers (NIBs) retain 15%, and the remaining 10% is used in the retail category.
Overview of Laila Hotel
Schloss Bangalore operates 13 luxury hotels across India and has 3,553 keys under the Leela Palaces, Hotels & Resorts brand.
The company adopts an asset lamp model with only 5 owned and custodian properties and 7 under management contracts, one of which is under the franchise model.
As of December 2024, the company has operations in all 7 commercial markets and 3 of the five leisure markets nationwide. The company accounts for nearly 18% of luxury hotel keys in these markets.
Should you subscribe to an IPO?
Analysts at Bajaj Broking said the IPO was more like a “turnover and brand leadership growth story” than a value-driven bet. The optimistic amount of the future has been priced within the optimistic range of the future.
“Investors should be cautious and recognize that this IPO is largely a bet on turnover and brand leadership growth stories, rather than playing value based on existing fundamentals,” the broker said.
Still, Bajaj Broking recommends subscribing with a long-term perspective.
According to Bajaj Broking, the company’s negative EPS number is negative (RS –0.12) and negative asset value (RS –160.57), which make valuation indicators and RONW inapplicable or misleading.
“This has brought a high valuation premium to listed peers such as Indian Hotels and EIH, both of which are consistent,” said Bajaj Broking analysts.
Anand Rathi analysts recommend subscribing to the IPO from a long-term perspective, citing the company’s brand positioning and operational strategy.
“Schloss Bangalore has a leading luxury hotel brand with a rich heritage and global appeal and is backed by premium catch-up hotels,” said Anand Rathi analyst.
According to them, “The company’s comprehensive luxury ecosystem has led to a diverse revenue stream and has a record of driving operational efficiency through an active asset management approach.”
Anand Rathi believes that the IPO is priced at a comparable price given the company’s long-term growth potential and market leadership in the luxury hotel sector.
SBI Securities is certain on IPO, no rating
Although SBI Securities has not provided clear advice yet, it largely provides a positive outlook for the fundamentals and prospects of Schloss Bangalore.
“In high-priced bands, the company is worth 26.3 times, and based on post-issuance capital is 26.3 times.”
“Schloss’ presence in luxury hotel space is good for above-average industry growth in the coming years…IPO earnings will be used to pay off debt, thereby reducing the debt-to-equity ratio from 1.1 times and improving overall profit margins.
“Despite the high valuation, the notes highlight improved financial performance, industry headwinds and deleveraging plans as key motivation,” SBI Secureties analysts said.
What are the risk factors for your investment?
Many analysts also highlighted several risk factors related to Leela Hotel:
- The company has pledged certain assets as collateral. Failure to fulfill debt obligations may result in seizure or forced sale of these assets.
- Any delay in renovating or renovating an existing hotel may harm operation and guest experience
- Delays or problems at the completion of a new property may result in loss of revenue opportunities
- Business depends largely on the advanced image of “Leela”. Any deterioration in brand reputation can affect revenue and future partnerships
Upcoming projects
Schloss Bangalore is expanding its portfolio and owns several underdeveloped luxury properties across the country. Here are the details of these expansion plans for Leela Hotels & Palace:
| Properties and locations | Types and segments | Expected keys | Capital expenditure sharing (Rs mn) | ownership | The expected date starts | status | FY25 ARR range (Rs per night) |
|---|---|---|---|---|---|---|---|
| Laila Palace, Agra | Palaces, heritage and grandeur | 99 | 4,419 | 100% | 2028 | Approved for pending processing, construction begins | Rs 46,000 – Rs 51,000 |
| Lira Palace, Srinagar | Hillside Palace | 170 | 1,899 | 50% | 2028 | Approval pending for renovation | Rs 28,000 – Rs 33,000 |
| Leela, Ayodhya | Hotel, spirit | 100 | 2,997 | 76% | 2028 | Approval pending | Rs 18,000 – Rs 23,000 |
| Leela, Ranthambore | Resort, heritage and grandeur | 76 | 1,280 | 51% | 2028 | Approval pending | Rs 49,000 – Rs 54,000 |
| Leela, Bandhavgarh | Resort, wildlife | 30 | 720 | 74% | 2028 | Approval pending | 48,000 rupees – 53,000 rupees |
Anchor investors
The company had raised Rs 157.5 crore from anchor investors before the IPO opened.
The anchor part received interest from a range of domestic institutional investors including the HDFC mutual fund, ICICI Prudent Mutual Fund, Nippon India Mutual Fund, Mirae Asset Mutual Fund, Invesco Mutual Fund and Aditya Birla Sun Life Insurance. Although global investors have also shown your interest, including sovereign funds and foreign portfolio investors (FPIS), such as Think Invest, Fidelity, Norges Bank, Whiteoak, Lunate, Lunate, UC Regents, TT International and Ward Ferry.
Other details of the IPO
BRLMS: JM Financial, Bofa Securities, Morgan Stanley, JP Morgan, Kotak Mahindra Capital, Axis Capital, Citi, IIFL Capital, ICICI Securities, Motilal Oswal and SBI Capital Markets
The minimum bid batch is set to 34 shares. The IPO registrar is KFIN Technologies Ltd.
