Leela Hotels-parent Schloss Bangalore IPO opens today: Should you subscribe?

The initial public offering (IPO) of Schloss Bangalore, which owns & operates 'The Leela' brand hotels in India, shall open for bidding on Monday, May 26 and shall close for bidding on Wednesday, May 28. Shares of the company shall be sold in the range of Rs 413-435 apiece, with a lot size of 34 equity shares in its multiples thereafter.

Schloss Bangalore is looking to raise a total of Rs 3,500 crore via IPO, which includes a fresh share sale of Rs 2,500 crore and an OFS of up to 2,29,88,505 equity shares worth Rs 1,000 crore by its promoter Project Ballet Bangalore Holdings (DIFC). It shall utilize the net proceeds from the issue for payment of repayment of certain borrowings and general corporate purposes.

Schloss Bangalore, established in March 2019, is a luxury hospitality company operating under 'The Leela' brand in India. It owns, operates, manages, and develops luxury hotels and resorts, offering premier accommodations and personalised services inspired by Indian hospitality. Schloss Bangalore is promoted by private equity funds managed and advised by affiliates of Brookfield.

Schloss Bangalore is one of India's largest luxury hospitality companies by number of keys, with a portfolio of 12 operational hotels comprising 3,382 keys, as of May 31, 2024. Its portfolio includes The Leela Palaces, The Leela Hotels, and The Leela Resorts. It operates through direct ownership and hotel management agreements with third-party owners.

The Leela brand has raised Rs 1,575 crore via anchor book by allocating 3.62 crore equity shares to anchor investors at a price of Rs 435 apiece. Its anchor book included names like WF Asian Reconnaissance Fund, Government Pension Fund Global, CLSA Global, Eastspring Investments, Citigroup Global, Societe Generale, Integrated Core Strategies, Fidelity, Goldman Sachs and more.

For the financial year ended on March 31, 2025, the company reported a net profit of Rs 47.66 crore with a revenue of Rs 1,406.56 crore. The company clocked a net loss of Rs 2.13 crore with a revenue of Rs 1,226.50 crore for the fiscal year 2023-24. The market capitalization of Leela Hotels IPO stands at Rs 10,155.36 crore.

Schloss Bangalore has reserved 75 per cent of the net issue for the qualified institutional bidders (QIBs), while non-instructional investors (NIIs) will have 15 per cent of the allocation in the issue. Retail investors will have 10 per cent for the allocation in this IPO.

JM Financial, BofA Securities India, Morgan Stanley India Company, JP Morgan India, Kotak Mahindra Capital Company, Axis Capital, Citigroup Global Markets India, IIFL Securities, Motilal Oswal Investment Advisors, SBI Capital Markets are the book running lead managers of the Leela Hotels IPO, while Kfin Technologies is the registrar for the issue. Here's what a host of brokerage firm said about the IPO of Schloss Bangalore IPO:

Anand Rathi Shares & Stock Brokers
Rating: Subscribe for long-term
Schloss Bangalore has a leading luxury hospitality brand with rich heritage and global appeal with marquee owned hotels in markets with high barriers to entry and a comprehensive luxury ecosystem resulting in diversified revenue sources along with a track record of driving operational efficiency by their active asset management approach, said Anand Rathi Shares & Stock Brokers.

"At the upper price band, the company is valued at P/E of 266.8 times, P/S of 11.2 times and market cap of Rs 14,527.1 crore with EV/Ebitda of 30 times post issue of equity shares. We believe that the IPO is fairly priced and recommend a 'subscribe for long term' rating to the IPO," it added.

SMIFS
Rating: Subscribe
Coupled with the asset-light expansion of its managed portfolio, strong fee-based income, and operational efficiency, Leela Hotels is expected to deliver meaningful top-line and bottom-line growth, solidifying its leadership in India’s fast-growing luxury hospitality sector and offering a compelling investment opportunity, said SMIFS.

"This expansion could contribute approximately Rs 265.8 crore in incremental annual revenue. We recommend subscribe tag to the issue as a good long-term investment as with a 32 per cent increase to number of rooms, 1.4 times higher than industry average RevPAR and fair valuations at some discount to the larger players," it added.

Arihant Capital Markets
Rating: Neutral
The Leela’s strong portfolio expansion, proven by significant ARR and RevPAR growth at key properties like The Leela Palace Jaipur, positions the brand for continued value creation. The issue is valued at a P/E ratio of 305 times, based on PAT of FY25 EPS of Rs 1.43, said Arihant Capital Markets.

"With strategic acquisitions and developments in high-demand locations, coupled with robust operational performance, It is well-placed for sustainable revenue growth and enhanced profitability, supporting a positive long-term outlook. We are recommending a 'neutral' for this issue currently," it added.

Chola Securities
Rating: Neutral
Indian’s luxury hospitality industry is poised to benefit from structural tailwinds such as growing affluence among Indian households, government initiative to promote tourism, rising foreign tourist arrivals among others. With an 18 per cent market share across its 13 locations, it maintains a strong presence and is well positioned to capitalize on the industry tailwinds, said Chola Securities.

"The company faces direct competition from three listed peers, namely, Indian Hotels Company, EIH and ITC Hotels. Debt repayment will be EPS accretive by about Rs. 5.75. Taking the same into account, It is available at a PER of 57 times post issue. We have a 'neutral' rating for Schloss Bangalore IPO," it added.

Canara Bank Securities
Rating: Subscribe with caution
Schloss Bangalore's strong brand, premium locations, and operational metrics position it to ride India’s luxury hospitality upcycle. Profitability achieved in FY25 reflects improved leverage, though margins remain modest vs peers. The IPO is priced at a steep P/E of 220.8 times, though P/B of 2.92 times is reasonable, said Canara Bank Securities.

"Furthermore, post-debt repayment, the P/E ratio may become more aligned with market expectations. Given its early-stage profitability, high-growth potential, and premium valuation, We recommend 'subscribe with caution' long-term investors with a high-risk appetite," it added.

BP Equities
Rating: Subscribe
The Leela has debt of Rs 3,585.7 crore , and the management plans to use the amount raised from the IPO to repay its debt. It is valued at a PE ratio of 220.8x on the upper price band based on FY25 earnings, which is comparatively higher than its peers, said BP Equities.

"Considering the company’s expanding portfolio, favourable industry dynamics, entry into new market segments, and intention to repay debt, we recommend a 'subscribe' rating for this issue for a medium to long-term perspective," it said.

Ventura Securities
Rating: Subscribe
The Leela plans to add seven new hotels by 2028, totalling around 678 keys, expanding into wildlife, heritage, and spiritual tourism. The company aims to leverage its strong brand, operational strengths, and strategic locations to capture growth opportunities in the luxury hospitality sector driven by favourable industry trends, said Ventura Securities with a 'subscribe' tag.