Leela Hotels-owner Schloss Bangalore IPO booked 4x after QIB push; check latest GMP

The initial public offering (IPO) of Schloss Bangalore managed to sail through during the third and final day of the bidding process, thanks to the institutional push. The issue was booked only six per cent on day one and ended day two with only 17 per cent subscription.

Schloss Bangalore is selling its shares in the price band of Rs 413-435 apiece. Investors can apply for a minimum of 34 shares and its multiples thereafter. It is looking to raise Rs 3,500 crore via IPO, which includes a fresh share sale of Rs 2,500 crore and offer-for-sale of up to 2,29,88,505 equity shares worth Rs 1,000 crore.

According to the data, the investors made bids for 19,91,43,270 equity shares, or 4.27 per cent, compared to the 4,66,10,169 equity shares offered for the subscription by 3.25 pm on Wednesday, May 28, 2025. The three-day bidding for the issue, which kicked-off on Monday, shall conclude today.

The allocation for qualified institutional bidders (QIBs) was subscribed 7.18 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 86 per cent. However, the quota set aside for retail investors was booked merely 66 per cent as of the same time.

Brookfield-backed Schloss Bangalore, established in March 2019, operates under 'The Leela' brand in India, focusing on luxury hospitality. It owns, manages, and develops luxury hotels and resorts, offering accommodations inspired by Indian hospitality. The company marks its presence in the luxury market and seeks to expand its footprint through its latest IPO offering.

The company's grey market premium (GMP) has experienced a correction, currently standing at Rs 2 per share, suggesting flat listing gains. Initially, the GMP was around Rs 20 before the issue began, decreasing to Rs 12-15 on the first day of bidding. This change reflects a subdued market response to the IPO.

Schloss Bangalore successfully raised Rs 1,575 crore through an anchor book by selling 3.62 crore equity shares to anchor investors at a price of Rs 435 each. Of the total net issue, 75% is reserved for qualified institutional bidders, 15% for non-instructional investors, and 10% for retail investors.

The IPO is managed by a consortium of financial institutions including JM Financial, BofA Securities India, and Morgan Stanley India Company, among others. Kfin Technologies has been appointed as the registrar for the issue. This strategic alliance aims to bolster the IPO's success amid market uncertainties.

Analysts have a generally positive outlook on this IPO. They cite the rising demand for luxury hospitality, the strong backing from Brookfield, strategic locations, plans to reduce debts, and overseas expansion as key strengths. However, there are concerns regarding the high pricing, reliance on select properties for major revenue, and the company's recent shift to profitability.

Schloss Bangalore engaged in the ownership, operation, management, and development of luxury hotels and resorts under the 'The Leela' brand which is a leading luxury hospitality brand seeks to capitalize on this opportunity through Enhancement initiatives in existing hotels and invest in upgrades across owned portfolio of hotels, said Master Capital.

"The company intends to expand Portfolio through acquisitions and developments of hotels by acquiring and/or developing five new hotels that will be directly owned and managed by the company. Investors looking to invest can invest in the IPO for the long term," it added.

For the financial year ending March 31, 2025, Schloss Bangalore reported a net profit of Rs 47.66 crore, recovering from a net loss of Rs 2.13 crore the previous year. The revenue for the current fiscal year was Rs 1,406.56 crore, demonstrating significant growth from Rs 1,226.50 crore in the prior period.

The market capitalisation for Leela Hotels IPO stands at Rs 10,155.36 crore, reflecting its substantial presence in the hospitality sector. Despite the flat listing gains, the company believes in its long-term growth potential and market positioning.

"Given the company’s strategic asset base, premium brand positioning and backing by a global institutional investor we view Schloss Bangalore as a compelling long-term play on India’s rising luxury and tourism sector. Hence, we recommend investors to 'subscribe' the issue for long term perspective," said Mehta Equities in its IPO note.

Overall, while the IPO has faced price corrections and subdued responses in the grey market, the strong fundamentals and strategic backing provide a solid foundation for future growth. Investors are advised to consider both the potential benefits and risks associated with this offering.

Key investment banks involved in the IPO remain optimistic about the company's trajectory, focusing on Schloss Bangalore's ability to leverage its brand and expand its market share.