IPO will list on 2 Jun'25
Schloss Bangalore Ltd
Minimum Investment
₹ 14,790 / 34 shares
Grey market premium
₹ 1 (0.2% premium)
Our Verdict:
Neutral
- Schloss Bangalore Ltd (The Leela) is well positioned in India’s luxury hospitality sector, which is expected to grow at a faster pace. Additionally, the company plans to use IPO proceeds to repay ~59% of its Rs 3,908.75 crore debt (as of 31 March 2025), which should significantly reduce interest costs and boost profitability.
- In terms of valuation, the IPO appears aggressively priced. At the upper band of Rs 435, it commands a P/E of 221 times FY25 EPS, valuing it at a substantial premium over more profitable peers like Indian Hotels and EIH. Therefore, material listing gains for IPO investors are unlikely.
- However, the company’s growth potential and asset-light business model remain promising. It commands the highest average room rates and revenue per available room (RevPAR) due to its pure luxury positioning.
- Considering these factors, long-term investors seeking pure luxury hotel exposure may consider buying the stock in the secondary market post-listing, once the price stabilizes.
About the company
Founded in
20 Mar'19
Managing director
Anuraag Bhatnagar
- Schloss Bangalore Ltd is a leading luxury hospitality company in India, operating under the iconic "The Leela" brand. It specializes in owning, operating, managing and developing premium hotels and resorts. As of March 31, 2025, “The Leela” is one of the largest luxury hospitality players in India by room count, with a portfolio of 13 operational properties totalling 3,553 keys. This includes The Leela Palaces, The Leela Hotels and The Leela Resorts, operated through a combination of direct ownership and management agreements with third-party owners.
- The company has a robust expansion pipeline, with 7 new properties—adding approximately 678 keys—planned through 2028. These additions, currently in various stages of acquisition and development, will be a mix of company-owned and managed assets.
STRENGTHS
- Global Recognition: “The Leela” brand has achieved strong international acclaim, ranking #1 among the world’s best hotel brands in 2020 and 2021 and consistently placed among the top three in 2023 and 2024, according to Travel + Leisure World’s Best Awards. This highlights the brand’s global appeal and trust.
- Market Leadership: In FY25, the company’s Revenue per Available Room (RevPAR) across its Owned Portfolio was 1.4 times higher than the average for India’s luxury hotel segment. For its Managed Portfolio, the Average Room Rate (ARR) and RevPAR outperformed comparable hotels in their respective micro-markets by 1.3 times and 1.2 times, respectively.
- Strategic Presence: As of December 31, 2024, the company’s portfolio spans all 7 major business markets and 3 of the top 5 leisure destinations in India, accounting for ~18% of the total luxury hotel keys in these regions.
- Robust Financial Turnaround: FY25 marked a major financial upswing, with net profit rising to Rs 47.65 crore from a loss of Rs 2.12 crore in FY24. Revenue grew by 11% while EBITDA increased by 17% year-over-year.
- Industry-Leading Margins: The company recorded an EBITDA margin of 48.92% in FY25—surpassing listed peers, whose margins ranged between 33.66% and 45.60%.
- Asset Enhancement Initiatives: Through targeted investments in refurbishment, upgrades and repurposing underutilized spaces, the company has significantly boosted portfolio performance. These efforts led to a more than twofold increase in Average Room Rent, rising from Rs 11,928 in FY20 to Rs 28,756 in FY25 and a RevPAR improvement from Rs 7,037 to Rs 15,242 over the same period.
RISK FACTORS
- Recent History of Losses: The company reported net losses of Rs 61.68 crore in FY23 and Rs 2.13 crore in FY24. Although FY25 marked a turnaround, the possibility of incurring future losses remains, which could impact its overall financial health and investor confidence.
- Negative Net Worth: The company and certain key subsidiaries have reported negative net worth in the past — Rs (2,825.72) crore as of FY24 and Rs (2,511.96) crore as of FY23. Continued or future negative net worth could adversely affect business operations, liquidity, and financial results.
- High Leverage: Operating in a capital-intensive sector, the company’s growth and operations require significant funding. As of March 31, 2025, it had outstanding consolidated borrowings of Rs 3,908.7 crore, which may constrain future financial flexibility and increase exposure to interest rate fluctuations.
- Encumbrance of Promoter Shareholding: Promoter shareholding in the company and certain subsidiaries has been pledged in favour of lenders. Any default under these financing agreements could result in lenders exercising their rights, potentially disrupting operations or leading to a change in control.
- Significant Contingent Liabilities: As of March 31, 2025, the company reported contingent liabilities of Rs 494.1 crore, which, if materialized, could adversely affect its financial position.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 3,500 crore
Fresh Issue
₹ 2,500 crore
OFS
₹ 1,000 crore
Price range
₹ 413 - 435
Lot size
34 shares
Issue Objective
The net proceeds from the fresh issue will be utilized for:
- Repayment/ pre-payment of certain borrowings availed by the company and its subsidiaries; and
- General corporate purposes.
Dates
Bidding open
26 May'25
Bidding close
28 May'25
Allotment date
29 May'25
Refund date
30 May'25
Listing
2 Jun'25
IPO Reservations
Qualified institutional buyers
>75%
Non-institutional investors
<15%
Retail individual investors
<10%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
This document has been issued by Liquide Solutions Private Limited for information purposes only. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall Liquide Life Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein.