Juniper Hotels IPO sails through on Day 3; QIB & retail book fully subscribed

The initial public offering (IPO) of Juniper Hotels managed to sail through on the third and final day of the bidding process, thanks  to the buying interest from institutional and retail investors. The issue was overall subscribed only 11 per cent on the first day, while it ended day two with 23 per cent of subscription.

The Mumbai-based Juniper Hotels is selling its shares in the price band of Rs 342-360 apiece with a lot size of 40 shares and its multiples thereafter. The issue is entirely a fresh sale of up to 5,00,00,000 equity shares. The company is looking to raise a total of Rs 1,800 crore via IPO. The bidding for the issue will close today.

According to the data, the investors made bids for 2,60,04,640 equity shares, or 90 per cent, compared to the 2,89,47,367 equity shares offered for the subscription by 2.05 pm on Friday, February 23. Any issue, which is overall subscribed at least 90 per cent is considered to be 'sailed through' on Dalal Street.

The allocation for retail investors was subscribed 1.10 times, while the portion reserved for non-institutional investors saw a subscription of only 32 per cent. However, the quota set aside for qualified institutional bidders (QIBs) attracted bids for 1.12 times as of the same time.

Juniper Hotels, which was 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.

The grey market premium of Juniper Hotels has taken a big hit as the company is commanding a premium of merely Rs 5 in the unofficial market which was around Rs 10 earlier. However, the premium in the grey market has been signaling muted-to-dull listing pop for the investors.

Brokerage firms gave a mixed view on the IPO. A few analysts have suggested subscribing to the issue citing the unfolding of opportunities on the back of improved efficiencies, acquisitions and expansion plans. However, others are suggested to give the IPO a skip due to mounting debt, loss-making nature and asset-heavy model of the business.

The company is planning to expand its Grand Hyatt Mumbai hotel with 293 additional rooms and 24 serviced apartments within the next three years. This expansion will contribute to the company's revenue growth. The MICE area of Grand Hyatt Mumbai will also be increased from 50,000 sq.ft to 100,000 sq.ft, which is expected to be operational from 1HFY25, said SBICap Securities.

"The company’s RevPAR/ARR has increased to Rs 7,479/9,875 in FY23 from Rs 3,345/6,222 in FY22. It plans to reduce its debt substantially from IPO proceeds which will turn the business profitable. We recommend investors to 'subscribe' to the issue for the long-term investment horizon," it added.

Ahead of its IPO, Juniper Hotels has allocated 2.25 crore equity shares at Rs 360 apiece to garnered Rs 810 crore from anchor investors. The company has reserved 75 per cent of the offer to qualified institutional bidders (QIBs), with non-institutional investors receiving 15 per cent, and the remaining 10 per cent allocated to retail investors.

Ajcon Global Services believes Juniper Hotels is well placed in the hospitality sector and gave a 'subscribe for long term' rating on the issue due to plans to reduces its debt substantially from the proceeds of the issue which in turn will reduce the interest burden on the company.

"The company has entered into trademark license agreements in relation to five such global brands, which bring on board a well-recognized global brand and among the best occupancy rate amongst the peers along with a competitive average revenue rate," it added.

CLSA India, JM Financial and ICICI Securities are the book running lead managers of the Juniper Hotels IPO, while Kfin Technologies is the registrar for the issue. Shares of the company are set to be listed on Wednesday, February 28 on both BSE and NSE.


Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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