The Leela IPO cruises through on final day of bidding with 4.5 times subscription. Check full status, GMP, allotment date, other details

The initial public offering (IPO) of Schloss Bangalore Limited, the operator of The Leela Palaces, Hotels & Resorts, sailed through on the final day of the issue with a total subscription of 4.5 times.

The enthusiasm was driven by the qualified institutional buyers (QIBs), who subscribed to the issue by 7.46 times. Meanwhile, the quota reserved for the non-institutional investors (NIIs) attracted a subscription of 1.02 times, while retail investors subscribed to the issue by 83%.

Ahead of its public issue, Schloss Bangalore Limited raised Rs 1,575 crore from 47 leading domestic and global anchor investors, with shares allotted at the upper end of the price band at Rs 435 apiece.

The company allocated over 3.62 crore equity shares to these investors, including 1.42 crore shares distributed among nine domestic mutual funds spanning 20 schemes. Notable global investors participating in the anchor round include Goldman Sachs, Fidelity, and Société Générale.

The Rs 3,500 crore IPO consists of a fresh issue worth Rs 2,500 crore and an offer for sale (OFS) amounting to Rs 1,000 crore.

The Leela GMP

Schloss Bangalore shares are trading at a grey market premium of just 0.23%, or Re 1, in the unlisted market ahead of their listing.

Should you subscribe to The Leela IPO?

Here is what brokerage firms have to say about the issue:

SBI Securities

The company is valued at an FY25 EV/EBITDA multiple of 26.3x at post-issue capital of the upper price band. The company’s Revenue/EBITDA has grown at a CAGR of 23%/25% respectively over the last 2 years, while on a net basis, the business has turned profitable in FY25.

The company’s presence in the luxury space offers high growth opportunities as the luxury segment within the hospitality sector is likely to grow at a higher pace. The company will repay its debt from the IPO proceeds, which will result in lower D/E from the current 1.1x and improved profitability.

Bajaj Broking

Bajaj Broking recommends subscribing to the issue for a long term.

Despite a revenue rise and EBITDA growth to Rs 600 crore in FY24, Schloss posted a net loss of Rs 2.13 crore for the year and an additional Rs 36.4 crore loss in the first two months of FY25.

Its negative EPS (Rs –0.12) and net asset value (Rs –160.57) make standard valuation ratios like P/E and RoNW irrelevant or skewed.

The company’s valuation appears steep compared to profitable peers like Indian Hotels and EIH, despite its strong brand and asset-light model. Investors are advised to approach the IPO with caution, as it is more of a brand-led growth bet than one backed by current fundamentals.

Lemonn Markets Desk

Analsyt Gaurav Garg of Lemonn Markets Desk said that Schloss Bangalore IPO is a long-term bet on the formalization and premiumization of India’s travel and hospitality sector. Investors with a patient outlook and appetite for high-quality consumption plays should consider subscribing to the issue.

“As the company deleverages and executes its expansion plans, shareholders may be well-positioned to benefit from compounding gains in a high-margin business,” he added.

The Leela IPO key dates

The initial public offering (IPO) of Schloss Bangalore Limited opened for subscription on May 26 and closes today at 5 pm. The allotment of shares is expected on May 29, with the company's stock market debut scheduled for June 2.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)