Juniper Hotels IPO
Published by Sharekhan Education | February 26, 2024
Juniper Hotels is coming up with an IPO having an issue size of ₹ 1800 Cr, Price Band in the range of ₹ 342-360. The issue opens on Wednesday, 21st Feb’2024 and closes on Friday, 23rd Feb’2024.
Juniper Hotels Company Overview:
Juniper Hotels stands as a distinguished luxury hotel development and ownership company, managing seven hotels and serviced apartments comprising a total of 1,836 rooms. Its iconic properties in Mumbai, Delhi, Ahmedabad, Lucknow, Raipur, and Hampi have garnered recognition. They have won awards like the “Best Luxury Business Hotel in Delhi” and the “Best 5 Star Hotel in Gujarat”. Juniper Hotels is a collaboration between Saraf Hotels Ltd and Two Seas Holdings Ltd, forming a strategic partnership blending hotel development expertise with international hospitality experience.
Why is Juniper Hotels coming up with an IPO?
The IPO involves a fresh issue of equity shares aggregating to Rs 1800 crores. The proceeds will be allocated to debt repayment and general corporate purposes. The minimum application is set at 40 shares, with multiples thereafter. Post allotment, shares will be listed on both BSE and NSE, contributing to the enhancement of the brand name.
Juniper Hotels excels at identifying micro-markets and strategic locations within cities, emphasizing proximity to airports, central business districts, industrial zones, and tourist hubs. The company strategically develops its hotels in locations with high barriers to entry. Leveraging robust asset management capabilities, Juniper Hotels focuses on optimizing operational efficiency and profitability. Functional clusters in operations, finance, human resources, procurement, and a dedicated above-property sales team facilitate this process.
Business Strategy of Juniper Hotels:
The company aims to expand its hospitality inventory by constructing additional floors at Grand Hyatt Mumbai Hotel and Residences, adding 293 rooms and 24 serviced apartments, totaling approximately 198,000 sq. ft. Additionally, Juniper Hotels plans to develop a commercial space of around 54,000 sq. ft (built-up) on adjacent land. The company adopts a diversified revenue approach, integrating streams from serviced apartments, restaurants, and Meetings, Incentives, Conferences, and Exhibitions (MICE) services.
Key Concerns regarding Juniper Hotels IPO
Operating in a capital-intensive industry, Juniper Hotels faces potential consequences from current and future leverage levels that may impact future business prospects. The company’s indebtedness and imposed financial conditions and restrictions could limit its growth. Moreover, reliance on three hotels for 90% of revenues exposes the company to concentration risk. Any future pandemics or widespread health emergencies could adversely affect Juniper Hotels’ business.
Financials:
Despite achieving a remarkable revenue growth of 100.2% CAGR over FY21-23, attributed to increased occupancy rates and average room rent, Juniper Hotels is currently running at a loss at the bottom line. At the upper end of the price band (₹342-360), the issue appears richly valued at approximately 33.4 times post-IPO EV/TTM EBITDA (Sep 2023).
Source: IPO Red Herring Prospectus
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