BQ Prime's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer BQ Prime's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
HDFC Securities Retail Research
Samhi Hotels Ltd. will launch its initial public offering today and the issue closes on Sep-18. The hotelier and asset management platform has fixed a price band of Rs 119 to Rs 126 Apiece. The minimum order quantity is 119 Shares and in multiple thereof.
Objects of Issue:
The offer comprises the fresh issue of up to Rs 12,000 million by Samhi Hotels and the offer for sale of up to 13,500,000 equity shares by the selling shareholders.
Offer for Sale
The object of the offer for sale is to allow the selling shareholders to sell an aggregate of up to 13,500,000 equity shares. Samhi Hotels will not receive any proceeds from the offer for sale. Each selling shareholder will be entitled to its respective portion of proceeds of the offer for sale, after deducting its respective proportion of the offer related expenses and the relevant taxes thereon.
Objects of the Fresh Issue
The net proceeds of the fresh Issue, i.e. gross proceeds of the fresh issue less the offer expenses apportioned to the company are proposed to be utilised in the following manner:
Repayment/ prepayment/ redemption, in full or in part, of certain borrowings availed of by Samhi Hills and its subsidiaries including payment of the interest accrued thereon; and:
General corporate purposes
In addition, Samhi Hills expect to achieve the benefit of listing of its equity shares on the stock exchanges.
About the company
Samhi Hotels is a prominent branded hotel ownership and asset management platform in India, with the third largest inventory of operational keys (owned and leased) in India as of March 31, 2023. Within 12 years of starting its business operations, the company has built a portfolio of 3,839 keys across 25 operating hotels in 12 of India's key urban consumption centers, including Bengaluru (Karnataka), Hyderabad (Telangana), National Capital Region, Pune (Maharashtra), Chennai (Tamil Nadu) and Ahmedabad (Gujarat), as of March 31, 2023.
Pursuant to the completion of the ACIC Acquisition on August 10, 2023, Samhi Hotels' portfolio has further increased to 4,801 keys across 31 operating hotels. It has adopted an acquisition-led strategy, which is underpinned by its track record of acquiring and successfully turning around hotels to grow its business.
Samhi Hotels acquire or build primarily business hotels, and it take steps to further upgrade properties and engage with established branded hotel operators to allow the hotels to be appropriately positioned within the market.
Subsequent to this one-time upgrade of the property, it deploys its in-house and proprietary asset management tools and capabilities to further enhance the ongoing financial and operational performance of the property.
Business Strategy:
With occupancy levels reaching above 70.00% levels across portfolio during the Financial Year 2023, Samhi Hotels intends to focus on increasing average room rates and improving operating margins, while driving occupancies further. It intends to focus on the following key initiatives to benefit from a favorable demand environment for the hospitality industry:
monitor the performance of various demand generators, analyse trends in the modes and sources of bookings and identify high occupancy periods to improve average room rates across portfolio. work with hotel operators to identify areas that could present incremental revenue opportunities.
rationalise operating cost base across all major expense heads while benchmarking each of the hotels to other hotels within its existing portfolio, using analytics platforms;
augment product offerings by way of improved food and beverage services, room facilities, event facilities for meetings, incentives, conferences and exhibitions to maintain competitiveness and achieve improved growth in market share; and
enhance hotel utilisation and revenue-generating areas within portfolio.
Key Concerns
Samhi Hotels was not in compliance with certain covenants under certain of its financing agreements in the past, and in case of any breach of covenants in the future, such non-compliance, if not waived, could adversely affect its business, results of operations and financial condition.
The company has experienced restated losses and negative net worth in recent years.
Samhi Hotels' indebtedness and the conditions and restrictions imposed by its financing arrangements may limit its ability to grow its business.
Business is subject to seasonal and cyclical variations that could result in fluctuations in results of operations.
Samhi Hotels has entered into hotel operator services agreements and other related agreements with Marriott, Hyatt and IHG (and their affiliates) to receive operating and marketing services for its hotels. The ACIC special purpose vehicles have entered into franchise agreements and brand license agreements with Marriott for the license of Marriott's brand name. If these agreements are terminated or not renewed, its business, results of operations and financial condition may be adversely affected.
A significant portion of revenues are derived from a few hotels and from hotels concentrated in a few geographical regions and any adverse developments affecting such hotels or regions could have an adverse effect on the business, results of operation and financial condition.
Click on the attachment to read the full IPO report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
