Chalet Hotels IPO Opens, Should You Invest?

Chalet Hotels IPO, one of the major IPO of the hospitality sector, of Rs. 1641 crores, opens on January 29^th, 2019.

The IPO comprises of equity shares of face value of Rs 10 each of total Rs 9,500 million (fresh issue) and an offer for sale of upto 24,685,000 equity shares (offered shares).

The promoters of the company have planned to dilute their shareholding, and are selling 24.6 million shares, which at the upper end of the price band will lead to ₹691.1 crore.

JM Financial Limited, Axis Capital Limited and Morgan Stanley India are the book running lead managers to Chalet Hotels IPO.

Chalet Hotels – Corporate Profile

• CHPL (group) has diversified business interests in Real estate development (residential and commercial), hospitality and retail. The group is a leading player where commercial real estate development is concerned with a developed area of over 20 million square feet (sq. ft.). CHPL is the hospitality arm of the group and which gets the benefits from the rich experience of the group in real estate development. Therefore, CHPL also enjoys the financial flexibility in funding its project.
• Chalet’s portfolio comprises of an inventory of 2,328 keys and has renowned brands such as JW Marriott, Westin, Marriott, Courtyard Marriott in its portfolio.
• All the hotel assets are situated in high-density business districts of the metro cities with high barriers-to-entry close to airports, major business centers or commercial districts and other convenient locations. CHL builds hotels of very superior standards, targeting the luxury-upper upscale and upscale hotel segments.
• The company has three new properties coming up, that includes two in Mumbai and one in Hyderabad, all of which are scheduled to be operational in the year 2021. Further, the company is also looking at new markets such as Pune, Chennai, as well as Goa.

Chalet Hotels IPO Details

The net proceeds of the fresh issue are planned to be used for the repayment/prepayment of certain indebtedness

• Issue Open: January 29th, 2019 – January 31st, 2019
• Issue Type: Book Built Issue IPO
• Issue Price: Rs 275-Rs 280 Per Equity Share
• Market Lot: 53 Shares
• Minimum Order Quantity: 53 Shares
• Listing At: BSE & NSE
• Listing Date: February 8^th, 2019

Valuation – Should you Invest?

The company has a net debt of ₹2,499 crore in its book and plans to use ₹720 crore from the primary capital to repay debt, which will bring it down to ₹1,549.8 crore. This will  also reduce the debt to equity ratio to just over 1.1 times.

In the last three financial years, Chalet Hotels has delivered compounded annual growth rate of 22 percent in revenue to Rs 840 crore in 2017-18 from Rs 564 crore reported in 2015-16. Net profit in 2018 stood at Rs 31 crore, which was down from Rs 127 crore recorded in 2016-17

Chalet Hotels Limited allots Rs. 492 cr to 27 anchor investors. The retail investors that are risk averse may “subscribe” to Chalet Hotels IPO.

Disclaimer: The content is provided for informational purposes only and it is not intended to be or constitute financial advice or any other advice.