Schloss Bangalore disappoint at stock market debut; shares list at 7% discount

Shares of Schloss Banglore, the parent company of the Leela Hotels, made disappointed at its debut at Dalal Street on Monday as the hotel chain was listed at 406 on NSE, signalling a discount of 6.67 per cent over its issue price of Rs 435 apeice. Similarly, the stock was listed with a discount of 6.5 per cent to Rs 406.50 on BSE.

However, the listing has been below the expectations. The grey market premium (GMP) of Schloss Bangalore’s initial public offering (IPO) has remained subdued, indicating a flat listing. The company was commanding a premium of only Rs 2 per share in the grey market, consistent with the expected listing outcomes.

Schloss Bangalore, a New Delhi-based luxury hospitality firm, offered shares for bidding from May 26 to May 28. Priced between Rs 413 and Rs 435 per share with a lot size of 34 shares, the IPO aimed to raise Rs 3,500 crore. This included a fresh issue of Rs 2,500 crore and an offer-for-sale (OFS) of up to 2,29,88,505 equity shares valued at Rs 1,000 crore.

The company is one of India’s largest luxury hospitality entities by number of keys, operating 12 hotels with a total of 3,382 keys as of May 31, 2024. Its brands include The Leela Palaces, Hotels, and Resorts, operating through a mix of direct ownership and management agreements with third-party owners.

The IPO was managed by an extensive list of book running lead managers, including JM Financial, JP Morgan India, BofA Securities India, Morgan Stanley India, Kotak Mahindra Capital Company, Axis Capital, Citigroup Global Markets India, IIFL Securities, Motilal Oswal Investment Advisors, and SBI Capital Markets. The registrar for the issue was Kfin Technologies.

Overall, the IPO was subscribed 4.50 times with 1.74 lakh applications. Qualified institutional bidders (QIBs) subscribed 7.46 times, while non-institutional investors (NIIs) subscribed 1.02 times. However, the retail investor segment saw an underwhelming response, with the quota undersubscribed at 83% following the three-day bidding window.

The subdued grey market premium and the IPO’s mixed subscription results reflect investor caution, amidst a competitive hospitality sector landscape. Despite the challenges, Schloss Bangalore’s established market presence and diverse portfolio continue to attract investor interest, albeit cautiously.