Juniper Hotels Limited IPO – Get Date, Price, Review and Details

In this article, we will disucss

• About the company
• Objects of the Offer
• Key Strengths and Opportunities
• Risks
• Financial Snapshot
• Conclusion

About the company

Juniper Hotels Ltd. is a luxury hotel development and ownership company. It is the largest owner, by number of keys of “Hyatt” affiliated hotels in India as of September 30, 2023. The company has a portfolio of seven hotels and serviced apartments and operates a total of 1,836 keys as of September 30, 2023. It benefits from a unique and longstanding partnership of over 40 years between Saraf Hotels (including erstwhile and current affiliates, collectively referred to as the “Saraf Group”), a hotel developer with a strong and well-established track record in India, and affiliates of a globally recognized premier hospitality brand, Hyatt Hotels Corporation (“HHC”). The company’s hotels and serviced apartments are present across the luxury, upper upscale and upscale categories of hotels and are established landmarks in Mumbai, Delhi, Ahmedabad, Lucknow, Raipur and Hampi. Juniper Hotels is jointly held by Saraf Hotels and its affiliate, Juniper Investments and Two Seas Holdings (an indirect subsidiary of HHC).

Objects of the Offer

The company intends to utilize the net proceeds towards the following objects:

• Repayment/ prepayment/ redemption, in full or in part, of certain outstanding borrowings availed by the company and its recent acquisitions, namely CHPL and CHHPL; and
• General corporate purposes

Key Strengths and Opportunities

• Expertise in site selection and identifying opportunities to develop hotels: The company has demonstrated a strong track record in establishing its presence across key cities. It identifies micro-markets and locations within the cities based on their proximity to airports, central business districts, areas with concentrated industrial catchments and areas with high tourism activities. Further, it has developed its hotels at locations with high barriers to entry
• Unique partnership between asset owner and operator brand backed by strong parentage: The Saraf Group and Hyatt have had a longstanding relationship of over 40 years, dating back to the opening of the first Hyatt hotel in India, namely, Hyatt Regency, Delhi, in 1982. This continuing relationship has led both partners to have a deep understanding and alignment on the business goals, company values and working culture, which has led to the success of the company, driving high EBITDA margins.
• Well positioned to benefit from industry trends: In Fiscal 2022, India was the fifth largest global economy with GDP at current prices of USD3.18 trillion. In addition to impressive economic growth, the Indian hotel industry benefits from other factors such as an increased population and individual incomes. Further, increased urbanization and the development of infrastructure have helped create new travel destinations and micro-markets for hotels. Domestic travel visits have grown nearly ten times at a CAGR of 13.5% between 2001 and 2019, and are estimated to maintain strong growth, attributable to a large middle-class population, young working population and overall increased individual incomes which drive more discretionary travel. This presents significant opportunities to capture demand.
• Experienced and qualified board and management team: Juniper Hotels is led by its founder and one of its Promoters, Arun Kumar Saraf, the Chairman and Managing Director who has notable experience in the hospitality industry and has been instrumental in the operations of the company. The company has a diverse Board, which is supplemented by a qualified management team with significant experience.

Risks

• Juniper Hotels and certain of its subsidiaries have incurred losses in the past. In the event the company and its Subsidiaries, including the newly acquired entities, CHPL and CHHPL, continue to incur losses, the consolidated results of operations, cash flows and financial condition will continue to be adversely affected.
• Juniper Hotels operates in a capital-intensive industry and thus, it has substantial indebtedness which requires significant cash flows to service and limits its ability to operate freely. The company may also incur additional indebtedness in the future. The current and future levels of leverage could have significant consequences for its shareholders and on the future financial results and business prospects.
• The company is subject to a number of conditions and restrictions under its financing agreements. Any breach of the terms under the financing arrangements or its inability to meet the obligations, including financial and other covenants under the financing arrangements could adversely affect the business and financial condition
• A significant portion of the revenue from operations of the company (90.48% in the six months ended September 30, 2023) is derived from three hotels/serviced apartments in Mumbai (Maharashtra) and New Delhi out of the portfolio of four hotels/serviced apartments of the Company, and any adverse developments affecting these hotels/serviced apartments or the regions in which they operate could have an adverse effect on the business, results of operation, cash flows and financial condition.

Financial Snapshot

Conclusion

Juniper Hotels operates a luxury hotel chain under the Hyatt brand. The company has a portfolio of seven luxury hotels and serviced properties and operates a total of 1,836 keys as of September 30, 2023. Juniper Hotels reported losses in Fiscal Years 2021,2022 and 2023 and failed to generate profits even for the six months ended September 2023. Being in a capital-intensive industry, it is bound to have significant debt. However, the net debt to total equity ratio as of FY 23 stands at 5.74 times which remains at very high levels. Even with the repayment of certain borrowings from the IPO proceeds, the debt-to-equity ratio is expected to remain elevated. Despite operating in a promising industry having sectoral tailwinds, Juniper Hotels faces intense competition from its peers. Further, Juniper Hotels' competitors are larger in scale, enjoy higher profit margins, and consistently report profits, setting them apart from Juniper Hotels in terms of financial performance and market positioning. As the company is a loss-making company, its PE cannot be calculated. Considering these factors, we advise investors to avoid the IPO.