Leela Hotels shares likely to list flat on June 2 amid valuation concerns

Schloss Bangalore (Leela Hotels IPO) is set to make its stock market debut on Monday, June 2, following the conclusion of its ₹3,500-crore initial public offering (IPO) earlier this week. However, analysts expect a flat listing due to investor concerns around the IPO's valuation.

Amid muted market sentiment, Prashanth Tapse of Mehta Equities expects a lackluster listing for Schloss Bangalore (Leela Hotels).

Despite the subdued sentiment, the IPO

received decent overall subscription, largely driven by Qualified Institutional Buyers (QIBs). In contrast, demand from retail and high net-worth individual (HNI) investors remained muted.

According to Tapse, this tepid interest is understandable given ongoing investor concerns about the company's valuation, its significant debt burden despite recent reductions, and operational challenges such as below-average occupancy rates.

Tapse advised investors who were allotted shares to 'Hold' them with a long-term perspective, citing the company's strong positioning to benefit from improving macroeconomic trends in travel and luxury hospitality. For those who did not receive an allotment, he recommended a 'Wait & Watch' approach, suggesting a potential opportunity to enter at more attractive valuations post-listing.

The issue was booked 4.50 times at close. Among the investor categories, QIBs led the demand by subscribing the category reserved for them by 7.46 times. The retail investors category was booked 0.83 times, and the non-institutional investors (NIIs) bid at 1.02 times.

The company sold shares at a fixed price band between ₹413 and ₹435 per share for its IPO, which was open for bidding between May 26 and May 28.

The Brookfield-backed company had raised ₹1,575 crore from 47 marquee domestic and global anchor investors. Goldman Sachs, Fidelity and Societe Generale are among top global funds that have invested in the company.

The IPO included a fresh issue of ₹2,500 crore and an offer for sale (OFS) worth ₹1,000 crore.

At the higher end of the price band, Schloss Bangalore was expected to have a market capitalisation of ₹14,527 crore.

Schloss Bangalore plans to use ₹2,300 crore out of net fresh issue proceeds for repayment of its debt, and the remainder for general corporate purposes.

Established on March 20, 2019, Schloss Bangalore is a luxury hospitality company operating under "The Leela" brand in India. It owns, operates, manages, and develops luxury hotels and resorts, offering premier accommodations and personalised services inspired by Indian hospitality.

As of May 2024, the company operates 12 properties with 3,382 keys under The Leela Palaces, Hotels, and Resorts.

Five of these — located in Bengaluru, Chennai, New Delhi, Jaipur, and Udaipur — are wholly owned.

For the fiscal ended on March 31, 2025, the company posted a profit of ₹47.66 crore and a revenue of ₹1,406.56 crore. Earlier, the firm posted a net loss of ₹2.13 crore and a revenue of ₹1,226.50 crore for FY24.

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