Muted Listing: Ventive Hospitality Shares Make Subdued Debut, List At 12% Premium From IPO Price; BUY?

Ventive Hospitality's stock made a lukewarm debut on the bourses on Monday, December 30, 2024, as it listed at a premium of nearly 12% on the BSE and NSE. This debut aligns with expectations fueled by strong subscription numbers and positive signals from the grey market.

Listing Performance

The company's shares opened at Rs 718.15 on the BSE, up 11.7% from the issue price of Rs 643, and quickly surged to Rs 732 during intraday trade. On the NSE, the stock opened at Rs 716, marking an 11.4% premium, and touched a high of Rs 732.80. By 10:15 am, the stock was trading at Rs 717.85 on the BSE and Rs 716.45 on the NSE.

This listing performance was broadly in line with the grey market premium (GMP) of Rs 68 reported earlier, which indicated a potential premium of 11% above the upper price band of Rs 643 per share.

Ventive Hospitality IPO

The Ventive Hospitality IPO was open for subscription from December 20 to December 24. The IPO, entirely a fresh issue of 2.49 crore shares, raised Rs 1,600 crore, with shares allocated to investors on December 26.

The IPO was managed by a consortium of leading book-running lead managers, including JM Financial, Axis Capital, HSBC Securities, ICICI Securities, and others. KFin Technologies served as the registrar for the issue.

Subscription Status

The Ventive Hospitality IPO witnessed investor interest, achieving an overall subscription of 9.82 times. Retail Individual Investors (RIIs) subscribed 5.94 times, Non-Institutional Investors (NIIs) subscribed 13.87 times, and Qualified Institutional Buyers (QIBs) subscribed 9.08 times. The public issue received bids for 14.17 crore shares against an offer of 1.44 crore shares.

Grey Market Premium (GMP)

Ventive Hospitality's grey market premium (GMP) was Rs 68 on listing day, implying a potential listing price of Rs 711. The stock's actual debut exceeded these projections, reflecting strong investor confidence and optimism.

Financial Highlights

Ventive Hospitality has showcased steady revenue growth in recent years, with Rs 229.2 crore in FY22, Rs 430.8 crore in FY23, and Rs 478 crore in FY24. For the six months ended September 30, 2024, the company reported revenue of Rs 372.8 crore. However, it incurred a loss of Rs 34.9 crore during this period, primarily due to expenses associated with recent acquisitions.

Despite this temporary setback, Ventive Hospitality has maintained a steady rise in total comprehensive income. The company reported Rs 29.7 crore in FY22, which surged to Rs 131.2 crore in FY23 and further to Rs 166.7 crore in FY24.

Valuation

The IPO was priced at a price-to-earnings (P/E) ratio of 40.39x at the upper band, making it attractive compared to peers such as Chalet Hotels (66.04x) and Indian Hotels Company (87.89x). This favourable valuation contributed to the investor response.

Use of Funds

The Rs 1,600 crore raised from the IPO will be deployed to repay and prepay certain borrowings, fund investments in subsidiaries, and address general corporate purposes. This allocation reflects Ventive Hospitality's focus on strengthening its balance sheet while expanding its portfolio.

About Ventive Hospitality

Ventive Hospitality operates a portfolio of luxury hotels and resorts under prominent global brands like Marriott, Hilton, Minor, and Atmosphere. Its premium offerings cater to a growing demand for high-end accommodations in India and beyond.

The company has allocated 75% of the IPO shares to QIBs, 15% to NIIs, and 10% to retail investors, with an additional preferential allocation for employees.