Ventive Hospitality IPO: A gateway to luxury growth
Between FY22 and FY24, it achieved a Compound Annual Growth Rate (CAGR) of 44 per cent in revenue and a remarkable 138 per cent in net profit.
About the Issue:
Ventive Hospitality Ltd is preparing to launch its Initial Public Offering (IPO) for equity shares. See the issue details below.
| IPO Details |
| IPO Opening Date |
December 20, 2024 |
| IPO Closing Date |
December 24, 2024 |
| Issue Type |
Book Built Issue IPO |
| Face Value |
Re 1 per equity share |
| IPO Price |
Rs 610 to Rs 643 per equity share |
| Min Order Quantity |
23 shares |
| Listing At |
BSE, NSE |
| Total Issue |
2,48,83,358 shares of FV Re 1* |
| (Aggregating up to Rs 1,600 Cr)* |
| Fresh Issue |
2,48,83,358 shares of FV Re 1* |
| (Aggregating up to Rs 1,600 Cr)* |
| QIB Shares Offered |
75% of the Offer |
| Retail Shares Offered |
10% of the Offer |
| NII (HNI) Shares Offered |
15% of the Offer |
| *At Upper Price Band |
|
Objects of the Issue
Since the offer is exclusively a fresh issue, it is noteworthy that the company will use the proceeds for its growth and expansion plans, rather than the funds flowing to promoters.
The company plans to allocate the net proceeds raised from the fresh issue for the following purposes:
1. Repayment/prepayment, in part or full, of certain of borrowings availed by the company
a. Including payment of interest accrued thereon
b. Step-down subsidiaries, namely SS & L Beach Pvt Ltd and Maldives Property Holdings Pvt Ltd, including the payment of interest thereon through investment in such step-down subsidiaries
2. General corporate purposes.
Promoter holding
Atul I. Chordia, Atul I. Chordia HUF, Premsagar Infra Realty Pvt Ltd, BRE Asia ICC Holdings Ltd and BREP Asia III India Holding Co VI Pte. Ltd are the promoters of the company. The promoters currently hold a pre-issue shareholding stake of 80.90 per cent in the company.
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Company profile
The company specializes in owning hospitality assets with a strong emphasis on luxury offerings across business and leisure segments. Its portfolio includes properties operated by or franchised from renowned global brands such as Marriott, Hilton, Minor, and Atmosphere.
Through a strategic mix of development and acquisition, the company has expanded its portfolio into new geographies, including Bengaluru, Varanasi, and the Maldives, over the past few years.
The pre-acquisition luxury asset includes JW Marriott, Pune, while post-acquisition additions feature JW Marriott, Pune, The Ritz-Carlton, Pune, Conrad Maldives, Anantara Maldives, and Raaya by Atmosphere in the Maldives.
As of September 30, 2024, the portfolio comprises 11 operational hospitality assets across India and the Maldives, with a total of 2,036 keys spanning luxury, upper-upscale, and upscale segments.
Financials
| Rs (in crore) |
FY22 |
FY23 |
FY24 |
H1FY25 |
| Revenue |
237.51 |
441.75 |
495 |
388.93 |
| Profit Before Tax |
36.03 |
159.19 |
205.19 |
27.17 |
| Net Profit |
29.43 |
131.27 |
166.32 |
-20.76 |
The company has demonstrated impressive growth in revenue and profits over the past few years. Between FY22 and FY24, it achieved a Compound Annual Growth Rate (CAGR) of 44 per cent in revenue and a remarkable 138 per cent in net profit.
However, challenges emerged in H1FY25, with annualized figures pointing to a robust 57 per cent growth in revenue but raising concerns on the profitability front. The company reported losses during this period, primarily due to elevated operating expenses. 'Other expenses' amounted to Rs 128 crore, significantly impacting overall profitability.
Despite generating a total income of Rs 389 crore and an operating income of Rs 164 crore, these elevated costs resulted in a net loss for H1FY25. Additionally, recent debt-funded acquisitions have increased the company’s financial leverage, further contributing to higher finance costs.
Valuation & Outlook
| Company Name |
P/E |
P/B |
RoE (%)* |
| Ventive Hospitality Ltd |
40* |
2 |
66 |
| Listed Peers |
| Chalet Hotels Ltd |
293 |
8 |
17 |
| Samhi Hotels Ltd |
- |
4 |
- |
| Juniper Hotels Ltd |
229 |
3 |
2 |
| The Indian Hotels Company Ltd |
75 |
12 |
14 |
| EIH Ltd |
40 |
7 |
19 |
| Lemon Tree Hotels Ltd |
82 |
12 |
20 |
| Apeejay Surrendra Park Hotels Ltd |
57 |
3 |
8 |
*RoE: Based on FY24 data
The issue is priced with a P/BV ratio of 2.22 times, calculated using its Net Asset Value (NAV) of Rs 289.56 as of September 30, 2024. At the upper price cap, it is priced at a P/BV ratio of 1.86 times, considering its post-IPO NAV.
Based on the company's annualized FY25 earnings and fully diluted equity capital, the price-to-earnings (P/E) ratio is negative due to the losses incurred in H1FY25. Considering the FY24 earnings, the P/E ratio is 40x, making the issue appear reasonably priced for FY24 performance.
The company delivered an impressive return on equity (RoE) of 66 per cent for FY24. As a result, the company is significantly outperforming its listed peers based on its strong FY24 performance.
The company is set to raise Rs 1,600 crore through the issue, with plans to utilize the proceeds for loan repayment and interest reduction. This strategic move is expected to ease its financial burden and enhance profitability.
The December quarter holds promising revenue prospects, driven by a surge in tourism and hospitality demand during the festive and year-end season.
Backed by strong global operators like Marriott, Hilton, Minor, and Atmosphere, a solid track record of financial performance, and significant future growth potential, we recommend subscribing to the issue with a long-term investment perspective.