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16 October 2023

SAMHI Hotels IPO: Stepping into the Hospitality Future

Introduction:

SAMHI Hotels Limited, founded in 2010, is a prominent hotel ownership and asset management platform in India. The company specializes in branded hotels and operates a portfolio of hotels across key urban centers in India. SAMHI Hotels has recently made headlines with its Initial Public Offering (IPO), a significant event in its journey.

IPO Highlights:

SAMHI Hotels' IPO, valued at Rs 1,370.10 crores, comprised a fresh issue of 9.52 crore shares worth Rs 1,200.00 crores and an offer for sale of 1.35 crore shares worth Rs 170.10 crores. The IPO subscription period spanned from September 14, 2023, to September 18, 2023, with allotment finalization on September 22, 2023. Shares of the company were listed on both BSE and NSE on September 22, 2023. The price band for the IPO ranged from ₹119 to ₹126 per share, with a minimum lot size of 119 shares and a minimum investment requirement of ₹14,994 for retail investors.

Key Market Players:

The book running lead managers for the SAMHI Hotels IPO were Jm Financial Limited and Kotak Mahindra Capital Company Limited. Kfin Technologies Limited served as the registrar for the issue.

Stock Performance:

As of October 6, 2023, SAMHI Hotels Limited's stock was trading at ₹164.95, marking a 1.76% increase. The stock opened at ₹163.80, achieved a high of ₹167.90, and touched a low of ₹161.35. The previous closing price was ₹162.10, with a total traded value of 19,98,957 shares. Over the last 52 weeks, the stock reached a high of ₹146.60 and a low of ₹127.25.

Ownership Structure:

The pre-issue shareholding stood at 122,797,231, while post-issue, it increased to 218,035,326 shares.

Financial Insights:

As of March 31, 2023, SAMHI Hotels exhibited strong financial indicators. The company's assets totaled ₹2,263.00 crores, with revenue of ₹761.42 crores. While it had been reporting losses in previous years, it showed signs of improving financial performance. The net worth was at ₹-871.43 crores, with reserves and surplus of ₹-816.18 crores. The total borrowing as of that date was ₹2,787.54 crores.

Market Indicators:

Key performance indicators included a Market Capitalization of ₹2,747 crores.

Objectives of the Issue:

The net proceeds from the IPO were intended to be allocated for:

1. Repayment, prepayment, or redemption of certain borrowings availed by the company and its subsidiaries, including the payment of accrued interest.
2. General corporate purposes.

Expert Opinion:

Pointed out that SAMHI Hotels is making efforts to enhance its brand value through partnerships with premium hotel brands. While the company has posted losses so far and has a negative Net Asset Value (NAV), it's worth noting that the hospitality sector has gained interest after the COVID-19 pandemic. Investors seeking long-term rewards may consider investing, especially once the company turns profitable.

Subscription Status:

The SAMHI Hotels IPO garnered substantial interest from investors, with a subscription rate of 5.57 times as of September 18, 2023. Retail investors showed moderate interest with a subscription rate of 1.17 times. Non-Institutional Investors (NII) participated actively, with a subscription rate of 1.29 times, including 1.42 times for bids above ₹10 lakhs (bNII) and 1.02 times for bids below ₹10 lakhs (sNII).

Conclusion:

SAMHI Hotels Limited's entry into the IPO market is a significant step in its journey within the Indian hospitality industry. Potential investors should carefully assess the company's financials and prospects, considering the evolving hospitality landscape post-COVID-19. As always, align your investment decisions with your financial goals and risk tolerance.

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