Juniper Hotels shares hit upper circuit after muted debut; should you hold or exit the stock?

Shares of Juniper Hotels Ltd saw a strong buying interest post listing on Wednesday as the stock hit the upper circuit on its maiden trading session following the debut. The stock saw a strong follow-up buying after getting listed at the bourses earlier and was locked in the upper circuit limit of 10 per cent.

Juniper Hotels kicked-off its maiden trading session at Rs 365 apiece on NSE, a premium of 1.33 per cent over the issue price of Rs 360 apiece. The stock was listed on BSE on a flat note at Rs 361.20 on BSE, a mere premium of 0.33 per cent on the given issue price.

However, the stock surged another 10 per cent to Rs 397.30 on Wednesday, taking the overall listing gains to 10.36 per cent over the issue price. The total market capitalization of the company stood at more than 8,800 crore, with no seller for the stock on the exchanges. Investors are wondering, what should they do following this listing.

Despite lower subscription demand in the bidding process, Juniper Hotels listed above everyone’s expectations which can be attributed to brand 'Hyatt,' a well-known global brand and too big to ignore. Considering the sector demand and focus on India tourism along with the primary objective of reducing the debt, said Prashanth Tapse, Senior VP Research, Mehta Equities.

"With its established brand and strategically located assets, the company is well-positioned to capitalise on emerging hospitality trends. The hotel sector is expected to outperform in the coming years. Hence allotted investors can hold and add more at lower levels which can reward them in the medium to long term," he said.

Juniper Hotels, incorporated in September 1985, is a luxury hotel development and ownership company. It operates seven hotels and serviced apartments with a total of 1,836 rooms as of September 30, 2023, It has hotels and serviced apartments in Mumbai, Delhi, Ahmedabad, Lucknow, Raipur, and Hampi in the luxury, upper upscale and upscale categories.

Juniper Hotels, the high-end hotel developer known for its Hyatt-affiliated chains, witnessed a flat debut on the stock market, This performance aligns with pre-listing expectations, which were tempered by muted investor enthusiasm and a lack of significant gray market premium, said Shivani Nyati, Head of Wealth at Swastika Investmart

"The saturated hospitality sector raises concerns about Juniper's ability to maintain its market share amidst fierce competition. While Juniper boasts a well-established presence, its recent financial performance has not been particularly strong, potentially deterring investors. Thus, considering all these factors, a cautious approach is crucial for investors," she added.

To recall, Juniper Hotels' IPO ran between February 21 and February 23. It sold its IPO in the fixed price band of Rs 342-360 per share with a lot size of 40 equity shares to raise a total of Rs 1,800 crore through, which was entirely a fresh share sale of up to 5,00,00,000 equity shares.

The issue was overall subscribed only 2.08 times, thanks to dull buying interest from all categories of investors. The quota for qualified institutional bidders was subscribed 2.96 times while the portion reserved for retail investors was subscribed 1.28 times. The allocation for non-institutional investors was undersubscribed and was booked merely 85 per cent.
 

"Considering the asset-heavy business model of the company, rising debt levels, and continued loss-making status, we recommend investors who have received allotment of Juniper Hotels Ltd. to book profits, if any, on the listing day," said Parth Shah, Research Analyst at StoxBox

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