Juniper Hotels IPO subscribed only 6% on day one so far; GMP takes a hit

The initial public offering (IPO) of Juniper Hotels received a muted response from the investors during the first few hours of the bidding process on day one. The issue, which had kicked-off for bidding on Wednesday, February 21, received a cold shoulder from investors during the initial few hours.

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.

According to the data, the investors made bids for 18,21,400 equity shares, or 6 per cent, compared to the 2,89,47,367 equity shares offered for the subscription by 12.25 pm on Wednesday, February 21. The bidding for the issue will continue for three days and conclude on February 23, Friday.

The allocation for retail investors was subscribed 31 per cent, while the portion reserved for non-institutional investors saw a subscription of merely three per cent. However, the quota set aside for qualified institutional bidders (QIBs) was yet to attract any bids 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 5-6 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 have a mixed view on the stock.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.

Juniper Hotels is a high-end hotel development and ownership firm that holds the biggest number of Keys to 'Hyatt' associated hotels in India. 19.6 per cent of the hotel rooms and apartments in India linked with the Hyatt group are owned by it. Its properties can be found in major Indian cities in the luxury, upper upscale and upmarket categories, said Swastika Investmart.

"However, a cautious approach is warranted due to several considerations. The company operates in a highly competitive landscape, and its financial performance has yet to translate into positive net profits. While plans for value-adding acquisitions and selective growth indicate future potential, current financials lack a PE ratio for direct comparison," it said with a 'cautious' view.

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.

Juniper Hotels has demonstrated a strong track record in establishing its presence across key cities, said Ashika Research. The company is well positioned to benefit from the industry trends. With an improved demand environment for the hospitality industry, the company’s financial and operational performance has improved in the last two years, it said.

"The company has introduced complementary revenue generating streams and the company has robust asset management capabilities with a focus on enhancing operational efficiency and profitability. In terms of the valuations, on the higher price band,JHL demands market cap-to-sales multiple of 12 times," Ashika added.

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

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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