Leela Hotels IPO Day 3 Live: Issue subscribed 4.50x so far led by QIBs. Should you apply to Schloss Bangalore IPO?

Leela Hotels IPO: Schloss Bangalore, which operates Leela Palaces Hotels and Resorts, is still in the midst of its three-day public offering, which will end today (Wednesday, May 28).

Leela Hotels IPO price band has been fixed at ₹413-435 per share. Leela Hotels IPO lot size is 34 equity shares and in multiples of 34 equity shares thereafter. Within the public issue, Leela Hotels has allocated 75% of the shares for qualified institutional buyers (QIB), 15% for non-institutional investors (NII), and 10% is designated for retail investors.

Schloss Bangalore, recognized for its opulent hotels and resorts under "The Leela" brand, had a total of 3,382 rooms across 12 operational hotels as of May 31, 2024. Its collection features The Leela Palaces, The Leela Hotels, and The Leela Resorts, situated in 10 different locations across the country.

The parent company of Leela Palaces, Schloss Bangalore, raised ₹1,575 crore from its anchor investors during the IPO.

On the financial front, the firm has experienced remarkable growth, with EBITDA rising from ₹87.72 crore in FY22 to ₹600.03 crore in FY24.

Leela Hotels IPO subscription status

The initial public offer of Schloss Bangalore IPO has been subscribed 4.50 times on the third day of subscription, as per BSE data.

The initial share sale received bids for 20,96,73,750 shares against 4,66,10,169 shares on offer, at 17:24 IST, according to BSE.

The portion for retail investors received 83% subscription while the quota for non-institutional investors subscribed 1.02 times to the issue. The qualified institutional buyers (QIBs) portion has been booked 7.46 times.

On the first bidding day, Schloss Bangalore IPO subscription status was 6%, and on the second bidding, Leela Hotels IPO subscription status was 17%.

Leela Hotels IPO Review

As per the brokerage house Anand Rathi, at the upper price range, the company is being assessed with a P/E ratio of 266.8x, a P/S ratio of 11.2x, and a market capitalization of ₹1,45,271 million, along with an EV/EBITDA ratio of 30x following the issuance of equity shares. The brokerage considers the IPO to be reasonably priced and recommends a "Subscribe-Long term" rating for the IPO.

Geojit Securities indicates that Schloss Bangalore (The Leela) is valued at an EV/EBITDA of 27.5x for FY25 at the maximum price point of ₹435, which seems to be reasonably priced. Given its robust brand, luxury market positioning, intended technological integration, expansion of its portfolio, and favorable industry conditions, we suggest a Subscribe rating for those looking to invest for the long term.

Indsec Securities reported that as of March 25, Schloss Bangalore has a substantial debt amounting to Rs.39 billion; however, a large portion of the proceeds from the IPO is designated for reducing this debt, which is anticipated to significantly enhance the company's balance sheet and profitability metrics. From a structural perspective, the Indian luxury hotel sector is still relatively underdeveloped, with Average Room Rates (ARR) considerably lagging behind global standards.

Additionally, due to an ongoing mismatch between demand and supply, the long-term growth prospects remain promising. Therefore, given strong expansion plans, the intention to reduce debt, and favourable industry trends, the brokerage recommends a SUBSCRIBE rating on the offering.

Leela Hotels IPO details

Leela Hotels IPO worth ₹3,500 crore, which consists of a fresh equity share issuance of ₹2,500 crore and an offer for sale (OFS) of ₹1,000 crore by its promoter, Project Ballet Bangalore Holdings (DIFC) Pvt Ltd.

Schloss Bangalore, supported by Brookfield Asset Management, intends to allocate the proceeds from the fresh equity issuance to settle loans taken by the company and its subsidiaries, as well as for various general corporate activities.

The IPO is being overseen by a consortium of 11 merchant bankers, including JM Financial, BofA Securities India, Morgan Stanley India Company, JP Morgan India, Kotak Mahindra Capital Company, Axis Capital, Citigroup Global Markets India, IIFL Securities, ICICI Securities, Motilal Oswal Investment Advisors, and SBI Capital Markets.

Leela Hotels IPO GMP today

Leela Hotels IPO GMP today is +4.5. This indicates Leela Hotels share price was trading at a premium of ₹4.5 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Leela Hotels share price is indicated at ₹439.5 apiece, which is 1.03% higher than the IPO price of ₹435.

According to the grey market activity over the past 12 sessions, the existing GMP ( ₹4.5) indicates a downward trend. The minimum GMP recorded is ₹0.00, whereas the maximum stands at ₹20.00, as stated by experts at investorgain.com.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.