The much-awaited SAMHI Hotels Ltd IPO is now open for subscription until September 18, and investors are contemplating whether to pack their bags for this journey or skip it. Let’s take a closer look at what’s on offer.
Price Band and Grey Market Buzz:
SAMHI Hotels has set a price range of Rs 119-126 per equity share for its maiden public offering. In the grey market, where IPO shares can be traded unofficially, there’s a buzz with shares commanding a premium of Rs 35.
Expert Opinion – ‘Subscribe with Caution’:
Choice Broking offers a ‘Subscribe with caution’ rating for the IPO. They note that at the higher price band, SAMHI Hotels is demanding an EV/Sales multiple of 4.6 times (to its FY23 sales), which is at a discount to the peer average. Despite reporting net losses in recent years, the hotel sector is showing positive signs, thanks to factors like increased domestic business and personal travel, strong hotel room demand, and improved occupancy levels. With its multi-brand presence across price points, SAMHI Hotels is well-positioned to capitalize on this upswing.
About the IPO:
The IPO comprises a fresh issue of equity shares worth Rs 1,200 crore and an offer for sale (OFS) of up to 1.35 crore equity shares. Notably, the fresh issue size has been increased from the initial Rs 1,000 crore.
Stake Changes:
In a secondary market transaction before the IPO, Blue Chandra sold around 1.032 crore shares to various entities, reducing its stake from 30.65 percent to 22.25 percent. Post-OFS, Blue Chandra’s stake will decline further to 8.67 percent. Goldman Sachs Investments Holdings and GTI Capital Alpha will hold 7.84 percent and 6.24 percent stakes, respectively, in SAMHI Hotels post-IPO.
Use of Proceeds:
The IPO funds will primarily be used to repay debts amounting to Rs 900 crore, with the remainder allocated for general corporate purposes.
Offer Structure:
Approximately 75 percent of the IPO is reserved for qualified institutional buyers (QIBs), 15 percent for non-institutional investors, and the remaining 10 percent for retail investors.
Anchor Investors:
Ahead of the IPO, SAMHI Hotels secured Rs 616.54 crore via the anchor book, with 35 anchor investors participating. This included prominent names like SBI Mutual Fund, ICICI Prudential MF, Aditya Birla Sun Life MF, and several foreign investors.
Financial Performance:
While SAMHI Hotels showed robust operating performance due to improved occupancy levels and higher room rents, it reported net losses in recent years. The company reported a 6.8 percent CAGR growth in consolidated operating revenue to Rs 738.6 crore in FY23.
Company Overview:
SAMHI Hotels is a leading hotel ownership and asset management platform in India with a substantial inventory of operational keys across key urban centers. After the recent ACIC Acquisition, the portfolio now boasts 4,801 keys across 31 operating hotels.
Parties Involved:
JM Financial and Kotak Mahindra Capital Company are the book-running lead managers, and KFin Technologies is the registrar. The equity shares of SAMHI Hotels are proposed to be listed on both BSE and NSE.
As you consider your investment decision, keep in mind that the hospitality sector’s fortunes are closely tied to economic conditions and travel trends, so weigh your options carefully before checking in or checking out of this IPO.