After a stupendous 2-year period, the buzz across the IPO market continues. Pride Hotels, a homegrown Indian hospitality brand, is the latest to join the race. The company has got the SEBI approval for its upcoming proposed initial public offering (IPO).
Here is a detailed analysis of the issue size and IPO objectives as detailed by the company in its Draft Red Herring Prospectus (DRHP), which it filed in October.
Offer composition and size
The IPO size is estimated to be around Rs 1,000 crore and comprises a fresh issue of equity shares aggregating up to Rs 260 crore, along with an offer for sale (OFS) of up to 39.24 million equity shares by promoter selling shareholders, each with a face value of Rs 5, reported PTI, citing sources.
The shares will list on both the BSE and the National Stock Exchange of India. Motilal Oswal Investment Advisors and JM Financial are the book runners to the issue.
Objectives of the offer
#1 Proposed renovation of existing hotels
The largest portion, which is estimated to be Rs 159.68 crore, is kept for capital expenditure to renovate, refurbish, and upgrade seven identified hotels. These include properties in New Delhi, Ahmedabad, Kolkata, Bengaluru, Pune, Chennai, and Nagpur.
#2 Repayment of borrowings
The company will be utilising around Rs 40 crore for the full or partial repayment of outstanding borrowings. This is intended to reduce the company’s indebtedness, maintain a more favourable debt-to-equity ratio, and lower debt servicing costs.
#3 General corporate purposes
The remaining proceeds will be used for general corporate purposes. These include meeting working capital requirements, marketing, advertising, and business development expenses. This amount will not be more than 25% of the total raised funds from the fresh issue.
#4 Listing benefits
The company also expects to gain from the enhanced visibility and brand recognition that comes with being a listed entity, as well as the creation of a public market for its equity shares.
Business model of Pride Hotels
Pride Hotels operates a diversified hospitality business using owned, managed, and long-term leased models. Under the owned model, the company holds titles to land or buildings. Its asset-light managed model involves operating third-party hotels in exchange for signing, technical, and incentive fees based on profits. The long-term lease model enables expansion into key locations with limited capital outlay. The company serves business, leisure, and pilgrimage travellers through four sub-brands—Pride Plaza, Pride Premier, Pride Elite, and Biznotel by Pride—spanning the upscale to midscale segments.
Future pipeline of Pride Hotels
Pride Hotels has a confirmed Pipeline Portfolio of 21 hotels under development, which will add approximately 1,500 keys (rooms) to their operating inventory. These projects are spread across 19 cities, including business hubs, leisure destinations, and pilgrimage centres such as Ayodhya, Amritsar, and Nainital.
Beyond this confirmed pipeline, the company has also signed 11 letters of intent with third-party owners for additional properties that aggregate approximately 841 keys. The 1,500 keys in the primary Pipeline Portfolio are expected to be operational through FY29.
About the company
Pride Hotels is a homegrown Indian hospitality brand with over 38 years of experience. It operates 34 hotels and resorts comprising 2,723 keys across 32 cities. Its portfolio includes owned and managed properties under upscale to midscale brands like Pride Plaza and Pride Premier.