Samhi Hotels IPO: All You Need To Know

Samhi Hotels will launch its initial public offering on Sept. 14. The hotelier and asset management platform is looking to raise a total of Rs 1,370 crore, out of which Rs 1,200 crore will be raised through a fresh issue.

Issue Details

• Issue opens: Sept. 14.

• Issue closes: Sept. 18.

• Face value: Re 1.

• Price band: Rs 119-126 per share.

• Lot size: 119 shares.

• Fresh issue size: Rs 1,200 crore.

• Offer for sale size: Rs 170.10 crore.

• Total issue size: Rs 1,370.10 crore.

• Issue type: Book-building process.

• Listing: BSE and NSE.

Blue Chandra Pte. had undertaken a pre-IPO secondary transfer of 1.03 crore shares at a price of Rs 126 per share for a cash consideration of Rs 130 crore on Sept. 6 and 8.

Business

Samhi Hotels is a hotel ownership and asset management platform with the third largest inventory of operational keys, comprising both owned and leased properties, in India.

Their portfolio of hotels comprises 4,801 keys across 31 operating hotels, which are based in key urban consumption centres like Bengaluru, Hyderabad, the National Capital Region, Pune, and Chennai.

They have adopted an acquisition-led strategy wherein they acquire and turnaround hotels to expand their business. They also upgrade properties and then deploy their in-house capabilities for the operations of the hotel.

Their hotel portfolio is categorised into three distinct classifications: upper upscale and upscale, upper mid-scale, and mid-scale. As of FY23, 51.14% of their total income was derived from upper-mid-scale and mid-scale hotels. Their upper-upscale and upscale hotels contributed 47.35% of the total revenue.

Use Of Proceeds

• The Rs 1,200 crore from the IPO has been allocated for payment, in full or in part, of certain borrowings availed by the company and their subsidiaries.

Risk Factors

• The company has incurred losses and had a negative net worth for the past three financial years.

• The company has a debt-to-equity ratio of 3.45 times, with the current portion of non-current borrowings and interest standing at Rs 2,812.49 crore. The burden of debt financing may limit business expansion opportunities.

• The business is seasonal and cyclical in nature. The revenue per available room fluctuated between Rs 3,364 for the first half of FY23 and Rs 3,995 for the second half.

• There is a concentration risk where almost a third of total revenue comes from the three largest Hyatt Regency Pune, Sheraton Hyderabad, and Courtyard by Marriott Bengaluru Outer Ring Road hotels.

• 84% of the portfolio's hotels are acquired, and if they are unable to realise the anticipated growth opportunities and synergies from acquisition, the business may be adversely affected.

Allocation To Anchor Investors

Samhi Hotels allocated 4.89 crore shares to anchor investors ahead of the opening of its public bid on Thursday. The shares were allotted at the upper price limit of Rs 126 per equity share.

Anchor investors comprised Government of Singapore, Monetary Authority of Singapore, SBI Mutual Fund, Tata Mutual Fund, and ICICI Mutual Fund, among several others. Out of the total anchor investor allocation, 1.81 crore shares were allocated to five domestic mutual funds via 10 schemes.

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