K Raheja Corp group company Chalet Hotels is looking to mop up a fresh amount of Rs. 950 crore while the company's promoter aim at offloading as many as 2.47 crore shares. So, the total issue size of the Initial public offer is Rs. 1,641 crore. The price band for the issue has been fixed at Rs 275-280 apiece and bids can be made in multiples of 53 shares.
The IPO issue is open until January 31.
JM Financial, Axis Capital and Morgan Stanley India are the book running lead manager for the IPO issue.
Company profile: Chalet Hotels as such is backed by a real estate developer so the overall development cost for the company is less. The company operates hotel business out of 5 properties with 2328 hotel rooms. The company has a lower staff to room ration in comparison to other players in the market. At the same time, due to its efficient leveraging of energy, the company has managed to generate higher returns.
Objective of Chalet Hotels IPO: Through the initial public offer the company aims at paying off some of the outstanding company debt and the remaining funds shall be put to corporate use.
Financial performance: For the year ended March 2018, the company's turnover has been Rs 930 crore with Ebidta of Rs 350 crore. The company's net debt as on FY 2018 was Rs 2,653 crore.
Valuations: Stock is available at a cash price to earnings multiple of 38.7 times in comparison to an industry average of 27.8 times.
Should You Invest?
As per one of the brokerage houses, the capital intensive industry should be looked at from a broader perspective such as the cash profit or EV/Ebitda basis. And as the valuation is fairly pricedat 25.4 times compared to that of other players within the industry. There is little room for share price appreciation, nonetheless with prospects for the industry booming as a whole due to higher demand, low room cost etc. the issue has been assigned a 'Subscribe' rating with a caution.