SAMHI Hotels IPO fully subscribed on final day of bidding; QIBs lead bidding process

The Rs 1,370-crore initial public offering (IPO) of SAMHI Hotels managed to sail through on the third and final day of the bidding process, thanks to institutional bidders. The issue had ended day one with only seven per cent subscription, while it was booked 13 per cent by the end of day two of bidding.
 
SAMHI Hotels is offering its shares in the price band of Rs 119-126 apiece during the bidding process and investors can make a bid of a minimum of 119 equity shares and its multiples. The issue includes a sale of fresh equity shares worth Rs 1,200 crore, while an offer-for sale (OFS) of up to 1.35 crore equity shares worth Rs 170 crore.

According to the data, the investors made bids for 6,39,84,634 equity shares, or 1.02 times, compared to the 6,25,29,831 equity shares offered for the subscription by 1.00 pm on Monday, September 18. The bidding had commenced to conclude for bidding on Monday, September 18.

The allocation for qualified institutional bidders (QIBs) was booked 1.47 times, while the portion for retail investors saw a subscription of 83 per cent. However, the portion reserved for non-institutional investors was booked merely 27 per cent as of the mark at the same time.

Incorporated in 2010, SAMHI Hotels is a professionally managed branded hotel ownership and asset management platform in India. SAMHI's hotels operate under well-recognized hotel operators such as Courtyard by Marriott, Sheraton, Hyatt Regency, Hyatt Place, Fairfield by Marriott, Four Points by Sheraton, and Holiday Inn Express.

Majority of brokerages have a word of caution for the issue, citing its expensive valuations compared to peers, poor financials, seasonality in the operational performance and loss-making nature of the business. Majority of the analysts have suggested to give 'skip' to the issue, while some have suggested to subscribe to the issue.

It is to be noted that the company has posted losses for the reported periods and has the negative net worth. Post issue, looking at the P/B ratio at Rs.126, book value of Rs. 17.99 of P/Bv 7 times. The company is loss making Hospitality Company and having negative net worth. The company's net debt stood at Rs 2,613 crore as of FY23 due to acquisition of ACIC, said SMC Global's note.

"At the EBITDA level, the company is profitable but there is an interest burden of Rs 522 crore due to the acquisition which has impacted the bottom line of the company. Its business operations are working capital-intensive and on account of that it relies on short-term debt to fulfil its working capital requirements. Well-informed investors may opt for the issue for the long term," it added.

Samhi Hotels has mobilized Rs 616.54 crore from 35 anchors by allotting them 4,89,32,143 equity shares at a price of Rs 126 apiece. Anchor book of the company includes Government of Singapore, Monetary Authority of Singapore, CLSA Global Markets, Think India Opportunities Master Fund, HSBC Global, Natixis International Funds, Imco Emerging Markets Public Equity LP and more.

IDBI Capital has a portfolio of 4,801 keys across 31 operating hotels in 14 of India's key urban consumption centers. It acquired 962 keys across six operating hotels and land for the development of a hotel in Navi Mumbai, Maharashtra from ACIC in March, 2023, said IDBI Capital.

SAMHI's hotels operate under well-recognized hotel operators viz Marriott, Hyatt and IHG which provide its hotels' access to the operator's loyalty programs, management and operational expertise, industry best practices, online reservation systems, and marketing strategies. At the upper price band, IPO is priced at EV/EBITDA of 23.5 times based on FY23, with a 'subscribe' rating.

JM Financial and Kotak Mahindra Capital Company are the book-running managers to the issue, while Kfin Technologies has been appointed as the registrar to the issue. Shares of the company are likely to be listed on both BSE and NSE.

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