NEW DELHI: The Rs 1,641 crore initial public offer (IPO) of Chalet Hotels was subscribed 4 per cent by Tuesday noon on Day 1 of the bidding process.
The issue has received demand for a total of 17,59,123 shares so far against an issue size of 4,13,26,672 shares.
The company on Monday raised Rs 492 crore from 27 anchor investors.
The K Raheja Corp group company is looking to raise Rs 950 crore through fresh issuance, while existing shareholders are seeking to offload 2.47 crore shares.
The price band for the issue has been fixed at Rs 275-280 apiece and bids can be made in multiples of 53 shares.
At the higher end of the price band, the stock is valued at a cash P/E multiple of 38.7 times compared with an average of 27.8 times for its peers.
Chalet Hotels has 2,328 hotel rooms across five properties with a staff-to-room ratio of around 1.22 times compared with 2 times for peers operating in the same category. In addition, the company is among the efficient energy users, which has helped it generate higher margin compared with peers.
Choice Broking said hospitality being a
heavy industry should better be compared on a cash profit or EV/Ebitda basis.
“On an EV/Ebitda basis, it is a demanding valuation at 25.4 times compared with a peer average of 27.5 times. Thus, the issue seems to be fairly priced, leaving limited room for share price appreciation. However, considering the future industry outlook, relatively lower room rates compared with historical peak, efficient operations and industry-leading operating margin, we assign a ‘subscribe with caution’ rating to the issue,” it said.
The company intends to utilise the proceeds from the issue to repay certain debt and for
general corporate purposes. The issue will close on January 31.