Leela Hotels IPO: Is This the Next Blockbuster on the Stock Market?

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India’s luxury hospitality sector is abuzz as Schloss Bangalore Ltd., owner of the iconic ‘The Leela’ brand, launches its highly anticipated ₹3,500 crore IPO, opening for public subscription today. The offer, which combines a fresh issue of ₹2,500 crore and an offer for sale of ₹1,000 crore, is available at a price band of ₹413–435 per share, with a minimum lot size of 34 shares. The IPO will remain open until May 28, with allotment expected by May 29 and listing on June 2.

Key Highlights:

Strong Institutional Backing: The company raised ₹1,575 crore from 47 marquee anchor investors, including Goldman Sachs and Fidelity, underscoring institutional confidence in the brand’s turnaround story.

Grey Market Premium (GMP): Leela Hotels’ shares are commanding a modest GMP of ₹13 (about 3%) over the upper price band, signaling cautious optimism in the unofficial market.

Financials & Growth: Leela Hotels reported a 20% revenue jump to ₹1,406.55 crore in FY25, swinging to a net profit of ₹47.65 crore after years of losses. EBITDA margins improved to nearly 50%. However, the company still carries a hefty debt of ₹3,908.7 crore, which it plans to reduce significantly using IPO proceeds.

IPO Objective: The bulk of funds will go towards repaying ₹2,300 crore in loans, aiming to strengthen the balance sheet and support future expansion, including seven new luxury properties by 2028.

Should You Subscribe? Brokerages suggest subscribing for long-term investors, citing the brand’s strong recovery, robust revenue growth, and premium positioning. However, the sector’s competitive landscape and lingering debt warrant a cautious approach for those seeking short-term gains.

Bottom Line: Leela Hotels’ IPO offers a rare entry into India’s luxury hospitality segment, backed by a storied brand and visible turnaround. Long-term investors with an appetite for sectoral volatility may find it appealing, while cautious investors might prefer to watch post-listing performance.

Sources: Business Standard, Moneycontrol, NDTV Profit