Chalet Hotels IPO for Rs 1,641 crore opens today; five key things to know

By: | Published: January 29, 2019 10:39 AM

Chalet Hotels’ Initial Public Offering (IPO) for approximately Rs 1,640 crore opens for subscription today. We take a look at 5 key things to know.

Chalet Hotels’ Initial Public Offering (IPO) for approximately Rs 1,640 crore opens for subscription today

Chalet Hotels’ Initial Public Offering (IPO) for approximately Rs 1,640 crore opens for subscription today. Chalet Hotels looks to about Rs 950 crore through fresh issue of shares, while the existing shareholders of the K Raheja Corp group company look to sell another Rs 2.47 crore shares via OFS (offer for sale). We take a closer look at five key things to know.  

About Chalet Hotels

Part of the K. Raheja Corp, Chalet Hotels is an owner, developer and asset manager of high-end hotels in key metro cities in India. The Company’s hotel platform comprises five operating hotels including a hotel with a co-located serviced residence, located in the key Indian cities of Mumbai, Hyderabad and Bengaluru, representing 2,328 keys as of March 31, 2018, according to the company’s website.  The company’s hotels are branded with global hospitality brands such as JW Marriott, Westin, Marriott, Marriott Executive Apartments etc.

IPO details

Chalet Hotels has come out with a public offer for Rs 1,641 crore. The issue will open on Tuesday, 29 January 2019 and will close on Thursday, 31 January 2019. The company looks to raise up to Rs 950 crore by fresh equity issuance while the existing shareholders will offload another about 2.47 crore shares for approximately Rs 700 crore worth of shares via OFS (offer for sale). The company has set a price band of Rs 275-280 per equity share. It has set a minimum lot size of 53 shares and investors can pick up lots of 53 shares thereafter.

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IPO proceeds

According to the company’s prospectus, the proceeds of the issue will be used for repayment of certain indebtedness and also for general corporate purposes. The company will not receive any proceeds from the offer for sale, as all the proceeds from it will go to the selling shareholders.

Financials

For the previous year ended March 2018, the company’s total turnover stood at Rs 930 crore with earnings before interest, depreciation, tax and amortisation (Ebidta) of Rs 350 crore. The company’s net debt as on FY 2018 was Rs 2,653 crore.

Valuations

“The issue seems to be fairly priced, leaving limited room for share price appreciation. However, considering the future industry outlook, relatively lower room rates as compared to historical peak, efficient operations and industry leading operating margin, we assign a “Subscribe with Caution” rating to the issue,” Choice Broking said in a note.

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