Ventive Hospitality Limited has launched its Initial Public Offering (IPO) worth ₹1,600 crore, marking a significant event in the hospitality sector. The IPO opened on December 20, 2024, and will close on December 24, 2024. With the price band set between ₹610 and ₹643 per share, this IPO is entirely a fresh issue. Ventive Hospitality’s shares are expected to list on the BSE and NSE on December 30, 2024. Let’s dive into the details.
Company Overview
Ventive Hospitality owns:
- 11 luxury hotels with 2,036 keys in Pune, Bengaluru, and the Maldives under renowned brands like Marriott, Hilton, and Ritz-Carlton.
- 3.4 million sq ft of office and retail space in Pune, generating annual rental income of approximately ₹500 crore.
- 367 keys under development in Varanasi, Bengaluru, and Sri Lanka, expected to be operational by FY27-28.
Key IPO Details
| Particulars | Details |
|---|---|
| IPO Date | December 20-24, 2024 |
| Price Band | ₹610 to ₹643 per share |
| Lot Size | 23 shares |
| Minimum Investment | ₹14,789 |
| Fresh Issue | 2.49 crore shares (₹1,600 Cr) |
| Listing Date | December 30, 2024 |
| Exchanges | BSE, NSE |
Financial Performance
| Year | Revenue (₹ Cr) | Net Profit/Loss (₹ Cr) |
|---|---|---|
| FY22 | 1,197.61 | -146.2 |
| FY23 | 1,762.19 | 15.68 |
| FY24 (Half-Year) | 875.9 | -137.83 |
- Revenue CAGR (FY22-FY24): 44%
- Net Profit CAGR (FY22-FY24): 138%
Despite rapid revenue growth, the company incurred a net loss of ₹138 crore in the first half of FY25 due to acquisitions funded by debt.
Use of IPO Proceeds
The company plans to utilize the funds for:
- Debt Repayment: ₹1,400 crore of its total ₹3,600 crore debt.
- General Corporate Purposes.
Debt reduction aims to cut interest expenses and improve profitability.
Valuation and Peer Comparison
| Metrics | Ventive | Chalet Hotels |
|---|---|---|
| EV per Key (₹ Cr) | 8.4 | 7.8 |
| EV/EBITDA | 17x | 28x |
Ventive’s valuations appear reasonable compared to industry peers.
Grey Market Premium (GMP)
As of December 20, 2024, Ventive Hospitality’s shares are trading at a ₹67 premium in the grey market, implying a price of ₹710 per share. This represents a 10.42% premium over the upper price band of ₹643.
Pros and Cons of Investing
| Pros | Cons |
| Strong portfolio of luxury hotels and premium office spaces | High debt burden of ₹3,600 crore |
| Consistent revenue growth (44% CAGR between FY22-FY24) | Net losses reported in H1 FY25 |
| Reasonable valuation compared to peers | Dependence on global and local economic conditions |
| Plans to reduce debt through IPO proceeds | High competition in the hospitality and real estate sectors |
| Strategic locations in India and Maldives | Recent acquisitions may delay profitability improvements |
Expert Recommendations
- Canara Bank Securities: Neutral view due to profitability concerns but acknowledges strategic growth.
- Arihant Capital Markets: Subscribe for long-term, citing debt reduction plans and focus on premium locations.
Subscription Details (Day 1)
| Investor Category | Subscription (x) | Shares Offered | Shares Bid |
|---|---|---|---|
| QIB | 1.11 | 74,60,342 | 82,44,258 |
| NII | 0.10 | 37,30,171 | 3,76,326 |
| Retail | 0.65 | 24,86,781 | 16,23,041 |
| Total | 0.75 | 1,36,77,294 | 1,02,75,710 |
Conclusion
Ventive Hospitality IPO offers an opportunity to invest in a leading luxury hospitality company with a strong portfolio and strategic locations. While the company’s debt remains a concern, its focus on debt reduction and operational expansion provides long-term growth potential. Investors with a long-term outlook may consider subscribing.
Disclaimer
The information provided here is for educational purposes only and should not be considered as investment advice. Finguys.in and its contributors are not SEBI-registered advisors. Please consult your financial advisor before investing.