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Chalet Hotels lists at 5% premium over issue price

The initial public offering of Chalet Hotels, which owns, develops and manages high-end hotels in key metro cities in India, was subscribed 1.57 times on the last day of bidding on Thursday.

Thursday, February 7, 2019, 12:38 Hrs  [IST]
HBI | Mumbai

Shares of Chalet Hotels made a decent stock market debut on Thursday, as the scrip got listed at INR 294 on NSE, a 5 per cent premium over its issue price of INR 280 apiece. 

However, five minutes into trading, the scrip was down 3 per cent lower at INR 271 respectively. 

The INR 1,641-crore initial public offer (IPO) by Mumbai-based K Raheja Corp ran from January 29 to January 31 and was subscribed 1.57 times. 

The price band for the issue was fixed at Rs 275-280 apiece. The issue price of the IPO was fixed at INR 280 per share. At the issue price, the stock is valued at a cash P/E multiple of 38.7 times compared with an average of 27.8 times for its peers. On one-year forward EV/Ebitda, the scrip traded at 19.7 times against peers 21-22 times. 

Chalet has five properties which comprise 2,328 hotel rooms. The company’s hotel at Vashi, Navi Mumbai, is operated by the company under a licence agreement with Marriott. The rest four, which include a service residence, are operated in accordance with hotel operation and related agreements with Marriott. 

The hotelier has staff-to-room ratio of around 1.22 times compared with 2 times for peers operating in the same category. In addition, the company is among the efficient energy users, which has helped it generate higher margin compared with peers. 

For the year ended March 2018, the company’s turnover stood at Rs 930 crore with earnings before interest, depreciation, tax and amortisation (Ebidta) of INR 350 crore. The company’s net debt as on FY 2018 was INR 2,653 crore. 

The domestic hotel industry is at an inflexion point where occupancy level is rising as demand growth is exceeding supply growth. A slowdown in the economy, seasonal business and unexpected rise competition as cited as a possible risk to the company. 

(Source: Economic Times )

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