Schloss Bangalore Limited IPO5 min read
Schloss Bangalore Limited is coming up with an IPO. The company is planning to raise about Rs 3,500 crore through the IPO. The offering is fresh issue of equity shares of 5.75 crore and an offer for sale (OFS), which comprises 2.30 crore shares.
| IPO Date | May 26 2025- May 28 2025 |
| Listing Date | JUN 02, 2025 |
| Price | INR 413 to INR 435 per share |
| Lot Size | 34 shares and multiples thereof |
| Total Issue Size | INR 3,500 crore shares |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE, NSE |
Schloss Bangalore Limited IPO is a book-built issue worth ₹3,500 crores. The issue is a combination of fresh issue of 5.75 crore shares aggregating to ₹2,500 crores and offer for sale of 2.30 crore shares aggregating to ₹1,000 crore. Substantial portion of the IPO proceeds will be used by the company for the purposes of business.
About the promoters
The promoters of Schloss Bangalore Limited, the operator of The Leela luxury hotel chain, are a group of seven corporate entities, all affiliated with Brookfield Asset Management. These entities collectively hold 99.99% of the company’s equity on a fully diluted basis.
Promoter Entities
Brookfield Asset Management acquired The Leela hotel chain in October 2019, purchasing properties in New Delhi, Bengaluru, Chennai, and Udaipur, along with a land parcel in Agra, for nearly ₹4,000 crore.
The upcoming IPO includes a fresh issue of ₹2,500 crore and an offer for sale of ₹1,000 crore, with Brookfield offloading a portion of its stake through the sale
About the Company
The company operates, manages and develops luxury hotels and resorts under “The Leela” brand. As of March 31, 2025. The company has several properties in India. The company is the largest luxury hospitality companies by number of keys in India, comprising of 3,553 keys across 13 operational hotels. Our Portfolio includes The Leela Palaces, The Leela Hotels and The Leela Resorts.
The company is in the business of running hotel chain and it is in direct competition with Indian Hotels, ITC hotels among others.
Objects of the offer
The Company proposes to utilise the Net Proceeds towards funding the following objects:
- Repayment/ pre-payment, in full or part, of certain borrowings availed by the Company.
- General corporate purposes
Company justification for the pricing
- Improved Financial Performance
Schloss has demonstrated significant financial improvement in recent years. The company’s EBITDA increased from ₹87.72 crore in FY22 to ₹600.03 crore in FY24. Additionally, consolidated annual losses narrowed to ₹21.3 crore in FY24 from ₹616.8 crore in the previous year. - Strategic Debt Reduction
A substantial portion of the IPO proceeds (₹2,700 crore) is allocated for repaying existing debt, which stood at ₹4,052.5 crore as of May 2024. This move aims to strengthen the company’s balance sheet and reduce interest expenses. - Market Position and Growth Prospects
Operating 13 luxury hotels across India, Schloss plans to expand its portfolio by adding eight more properties by 2028. The Indian hospitality market is projected to grow to $31 billion by 2029, providing a favorable environment for the company’s expansion plans. - Adjusted IPO Size Reflecting Market Conditions
Initially planning to raise ₹5,000 crore, Schloss reduced the IPO size by 30% to ₹3,500 crore, comprising ₹2,500 crore through fresh issue and ₹1,000 crore via offer for sale. This adjustment aligns with current market conditions and investor sentiment.
Financial Snapshot (Yearly)
Particulars
| Indicator | Mar-23 | Mar-24 | Mar-25 |
| Total Rev. Ann. | 309.3 | 351.9 | 474.2 |
| Operating Profit Ann. | 131.4 | 151.8 | 175.2 |
| Interest Ann. | 155.5 | 169.1 | 188.8 |
| Net Profit Ann. | -25.3 | -12.9 | 34.2 |
| EPS Adj. latest Ann. | -0.7 | -0.4 | 1 |
| All financials are is in INR Cr and price data in INR | |||
Source: Trendlyne.com
Risk Factors
- Seasonal and Cyclical Industry Fluctuations
The hospitality sector is inherently seasonal and cyclical. Factors such as economic downturns, geopolitical tensions, or health crises (e.g., pandemics) can significantly impact occupancy rates and revenue. Premium hotels like those operated by Schloss are particularly susceptible to these fluctuations due to their higher operating costs. - Concentration of Revenue Sources
A significant portion of Schloss’s revenue is derived from five flagship hotels:
• The Leela Palace Bengaluru
• The Leela Palace New Delhi
• The Leela Palace Chennai
• The Leela Palace Jaipur
• The Leela Palace Udaipur
Any adverse events affecting these properties or their locations could disproportionately affect the company’s financial performance - Historical Financial Losses
Despite recent improvements, Schloss has a history of financial losses:
• FY2022: ₹319.8 crore loss
• FY2023: ₹61.7 crore loss
• FY2024: ₹2.1 crore loss
Continued profitability is essential for long-term sustainability and investor confidence. This might be achieved after a portion of the debt is repaid. - Regulatory Compliance Risks
Operating in the hospitality industry requires adherence to various regulations related to safety, health, environment, real estate, food, excise, tax, and labor laws. Non-compliance or changes in these regulations can adversely affect operations and financial performance. - High Debt Levels
As of May 2024, Schloss’s consolidated debt stood at ₹4,052.5 crore. While the company plans to use ₹2,700 crore from the IPO proceeds to reduce debt, the remaining debt could still pose financial challenges, especially if revenue targets are not met. - Dependence on Key Management and Brand Reputation
The company’s success is closely tied to its experienced management team and the reputation of The Leela brand. Any changes in leadership or negative publicity could impact operational efficiency and brand value.
| Particulars | Face value (₹) | Revenue from operations | EPS (Basic) (₹) | EPS (Diluted) (₹) | P/E | RoNW | Net Worth | NAV per Equity (₹) |
| Schloss Bangalore (Fiscal 2025) | 10.00 | 13,005.73 | 1.97 | 1.97 | [●]*** | 1.32% | 36,049.88 | 148.88 |
| Schloss Bangalore (Fiscal 2024) | 10.00 | 11,714.53 | (0.12) | (0.12) | [●]*** | N.A.* | (28,257.23) | (160.57) |
| Listed Peers (Fiscal 2025) | ||||||||
| The Indian Hotels Company Limited | 1.00 | 83,345.40 | 13.4 | 13.4 | 59.84 | 16.42% | 1,24,156.10 | 87.22 |
| Listed Peers (Fiscal 2024) | ||||||||
| The Indian Hotels Company Limited | 1.00 | 67,687.50 | 8.86 | 8.86 | 86.43 | 13.13% | 1,01,287.10 | 71.16 |
| EIH Limited | 2.00 | 25,112.71 | 10.22 | 10.22 | 36.24 | 16.58% | 40,863.65 | 65.34 |
| Chalet Hotels Limited | 10.00 | 14,172.52 | 13.54 | 13.53 | 59.93 | 15.03% | 18,508.68 | 84.74 |
| Juniper Hotels Limited | 10.00 | 8,176.63 | 1.46 | 1.46 | 197.91 | 0.90% | 26,552.81 | 119.34 |
| Ventive Hospitality Limited | 1.00 | 18,420.66 | (5.24) | (5.24) | N.A. | (1.82%) | 36,697.33 | 157.13 |
Investment Ratioanle
India is one of the fastest growing major economies in the world, with GDP projected to nearly double to $6.8 trillion in 2030 from $3.6 trillion in 2023 (Source: International Monetary Fund (IMF)).
The Indian Hospitality Industry is Underpenetrated and has Robust Growth Potential. The sharp increase in tourism has resulted in higher room rates and high occupancy rates.
Over last couple of years, post covid, there has been a boom in tourism sector. Also, the proceeds of the issue will be utilised for the purpose of debt repayment. Considerable part of the company’s profits go towards debt servicing. Once the interest burden is reduced the earning will see a sharp jump.
Analysis by Manish Shah SEBI Registered RIA. Regn Number. INA000016180
Source: DRHP
