The shares of Schloss Bangalore, the operator of luxury hotels and resorts chain under The Leela brand, were listed on NSE at Rs 406 apiece. This marks a discount of 6.67 percent over the IPO price of Rs 435 apiece.
On BSE, the shares of the company listed at Rs 406.50 apiece, marking a discount of nearly 6.55 percent over the IPO price.
However, after the weak market debut, the stock saw significant volatility. The shares of the company soared nearly 7 percent to close slightly below the IPO price at Rs 434 apiece. At close, the market capitalization of the company stood at over Rs 14,545 crore on BSE.
Notably, the listing price is strongly lower than the grey market estimates. The unlisted shares of the company were trading with marginal grey market premium (GMP) of Rs 2 per share (0.46 percent) over the IPO price at Rs 437 apiece ahead of listing, as per Investorgain.
The Rs 3,500-crore IPO of Schloss Bangalore was subscribed 4.5 times during May 26-28. Qualified Institutional Buyers (QIBs) showed the most interest in the issue, booking their reserved portion nearly 7.46 times. Non-institutional investors (NII) followed, reserving the portion kept for them 1.02 times. The portion reserved for retail investors however was undersubscribed, being booked 83 percent.
Schloss Bangalore's IPO comprised a fresh issue of equity shares worth Rs 2,500 crore and an offer for sale (OFS) of stocks valued at Rs 1,000 crore by promoter Project Ballet Bangalore Holdings (DIFC) Pvt Ltd. The company had set a price band of Rs 413-435 per share for the IPO. Investors could bid for a minimum of 34 shares, requiring an investment of Rs 14,790, and in multiples thereafter.
Should you buy, sell or hold Schloss Bangalore shares?
"Leela Hotels listed at a 6.6% discount, reflecting subdued investor sentiment despite strong institutional interest. Retail and non-institutional participation remained weak, with the retail portion under-subscribed and non-institutional bids only marginally above the threshold. A flat grey market premium ahead of the listing had already signaled muted near-term expectations. Elevated valuations continue to be a concern, weighing on investor confidence," said Satish Chandra Aluri from Lemonn Markets Desk.
While analysts had estimated a muted listing, they suggest that investors should hold the stock for the long term. "Short-term investors should moderate their expectations. The company has strong brand recognition, but it is advisable not to chase listing gains. Investors confident in the long-term potential of India’s luxury hotel industry can consider holding the stock," said Mahesh M Ojha, AVP – Research & Business Development at Hensex Securities.
Mehta Equities had also expected a flat listing, but viewed the stock as a good long-term opportunity. "The company is well-positioned to benefit from structural growth in India’s luxury travel and hospitality space. Allotted investors are advised to hold the stock from a long-term perspective, while non-allottees may wait for a post-listing correction to enter at better valuations," the brokerage said.
Bajaj Broking had also kept a 'subscribe' rating for the IPO for the long term. "Investors should be cautious, recognizing that this IPO is largely a bet on a turnaround and brand-led growth story, rather than a value play based on existing fundamentals," the brokerage had said.
Gaurav Garg from Lemonn Markets Desk noted that Schloss Bangalore IPO is a long-term bet on the formalization and premiumization of India’s travel and hospitality sector. “Investors with a patient outlook and appetite for high-quality consumption plays should consider subscribing to the issue,” he said.
Schloss Bangalore intends to utilise Rs 2,300 crore out of net fresh issue proceeds for repayment of its debt, and the remainder for general corporate purposes.
The company, that competes with listed entities like The Indian Hotels Company, EIH, Chalet Hotels, Juniper Hotels and ITC Hotels, claimed to be one of the largest luxury hospitality companies by number of keys in India. It operates 3,553 keys across 13 hotels of portfolio comprising The Leela Palaces, The Leela Hotels and The Leela Resorts.
JM Financial, BofA Securities India, Morgan Stanley India Company, JP Morgan India, Kotak Mahindra Capital Company, Axis Capital, Citigroup Global Markets India, IIFL Capital Services, ICICI Securities, Motilal Oswal Investment Advisors, and SBI Capital Markets were the merchant bankers for the issue.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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