Chalet Hotels IPO Review

Chalet Hotels IPO comprises fresh issue of equity shares of Rs. 10 each amounting to Rs. 950 crore and an offer for sale (OFS) of 2.47 crore share, both in the price band of Rs. 275 to Rs. 280 per share. Chalet Hotels IPO issue size aggregates to ~Rs. 1641 crores.

Issue OpensTuesday, Jan 29, 2019
Issue ClosesThursday, Jan 31, 2019
Issue Details Rs.950 Cr Fresh Issue
and OFS  of 24,685,000Shares
Issue Size Rs.1,641.18 Cr
Price BandRs.275 – 280
Bid Lot53 Equity Shares and multiple thereof
Issue Structure :
QIB50% of the offer
NIB15% of the offer 
Retail35% – 20,514,750 Shares– 574.41 Cr

About Chalet Hotels

  • Incorporated in 1986, Chalet Hotels Limited is the Owner, Developer and Asset Manager of high-end hotels in key metro cities in India.
  • Chalet Hotels is part of K. Raheja Corp group which is a leading business group.
  • Chalet Hotels own a portfolio of five operating hotels (including a hotel with a co-located serviced residence), representing 2,328 keys as of September 30, 2018, in Mumbai Metropolitan Region, Hyderabad and Bengaluru.
  • Out of these four hotels (including a hotel with a co-located serviced residence) are operated by Marriott Hotels India , which represents 2,176 keys in aggregate.
  • Presently, 100% equity is held by the promoters, K Raheja Corp Group which will come down to 71.41% post IPO.
  • Private Limited and its affiliates (collectively, “Marriott”).

Chalet Hotels: Financials

 (Rs. In Cr)
Revenue from Operations (Gross)873.78705.88572.94
Revenue Growth (%)21.22%26.59%
EBITDA % 37.67%46.60%26.09%
Profit Before Tax21.1979.12-166
Profit After Tax31.16127.44-112.49
Net Profit Margin3.57%18.05%
Share Capital171.1152.14152.14
Net worth as restated502.37471.17521.21
Long Term Borrowings2,215.152,050.581,902.28
Short Term Borrowings163.42324.75258.32
Net Asset Value (Rs.)29.3629.233.99
EPS (Rs.)1.827.97-7.39

For HY2019 , consolidated net sales stood at Rs 469.87 crore, OPM of 22%, Operating Profit of Rs 106.78 crore. With Other income stood at Rs 27.18 crore. Interest cost was at Rs 139.87 crore and depreciation stood at Rs 56.93 crore, thus, resulting in loss Rs 62.84 crore (PBT).

Chalet Hotels: Anchor Issue

Chalet Hotels has allotted 1,75,84,071 equity shares in the upper band of ₹280 per unit, aggregating to ₹492.35 crore to 27 anchor investors. The anchor investors include SBI Small Cap Fund, Fidelity Funds – India Focus Fund, Goldman Sachs India, HDFC Small Cap Fund and HDFC Standard Life Insurance Company.

Chalet Hotels: Assessment

  • Chalet Hotel operates in the luxury-upper upscale and upscale hotel segments.
  • Chalet Hotels has better EBITDA margin than the industry and has has backing of strong promoters.
  • Chalet Hotels benefits from hotel operation contracts with Marriott.
  • Chalet hotels are located at strategic locations with high barriers-to-entry and in high density business districts of cities.
  • Chalet Hotels has debt, which, is high at Rs. 2,689 crore. it intends to reduce it by Rs. 720 crore after the IPO.
  • It is gathered that there no activity in Grey Market for Chalet Holets IPO
  • I intend to give this IPO a miss due to my perception of unfavorable risk-reward and uncertain market conditions.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.

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