About the Company:
Ventive Hospitality Limited is primarily a hospitality asset owner with a strong focus on luxury offerings across both business and leisure segments in India and the Maldives. It was founded in 2002 as the hospitality division of Panchshil Realty, a real estate conglomerate based in Pune. In 2017, BRE Asia (formerly known as Xander Investment Holding XVI Limited), an affiliate of Blackstone, acquired a 50% stake in the company, whose current stake is at around 36%.
Until August 2024, its portfolio included an integrated hospitality-led development comprising the JW Marriott Pune, ICC Offices Pune, and ICC Pavilion Pune. In August 2024, through Acquisition Transactions, the company expanded its portfolio by acquiring 10 operational hospitality assets (seven in India and three in the Maldives) and 2 hospitality assets under development (one each in India and Sri Lanka), some of which were previously acquired by its Promoter, Promoter Group or their affiliates. Also, as a part of these transactions, it also acquired two Grade A office assets.
Among listed hospitality companies in India,
- the company’s pro forma revenue was the third highest in each of FY24 and FY23 and second highest for FY22 and
- pro forma EBITDA was the third highest in FY24 and second highest for each of FY23 and FY22.
The company’s portfolio comprises 11 operational hospitality assets in India and Maldives, totalling 2,036 keys across the luxury, upper upscale and upscale segments as at September 30, 2024, which consist, 7 hospitality assets with 1,331 keys which were developed by the company, its Promoter, Promoter Group and their affiliates and 4 hospitality assets with 705 keys which they acquired.
Its portfolio also consists of 4 stabilized Grade A annuity assets in Pune, having a total Leasable Area of 3.40 million square feet and committed occupancy of 95.55% as at September 30, 2024.
The company has a few assets under development, and it plans to increase the number of keys by an estimated 367 keys to reach approximately 2,403 keys in FY2028.
Promoters hold 99.59% of the pre-offer equity share capital of the Company on a fully diluted basis, which could reduce to 88.98% post-issue.
IPO Details:
IPO Date | Friday, December 20, 2024 to Tuesday, December 24, 2024 |
Issue Type | Book building |
Tentative Listing Date | Monday, December 30, 2024 |
Face Value | Rs. 1 per share |
Price Band | Rs. 610 to Rs. 643 per share |
Lot Size | 23 shares |
Minimum Retail Investment (at the upper price band) | Rs. 14,789 |
Issue Size | Total issue (at upper price band) of Rs. 1,600 crore, comprising: Fresh issue - Rs. 1,600 crore Offer for Sale - Nil |
Expected Post-Issue Market Cap | Rs. 15,016.70 crore (at upper price band) |
Objects of the Offer:
The company proposes to utilise the Net Proceeds towards funding the following objects:
Particulars | Amount (Rs. in crore) |
Repayment/prepayment, in part or full, of certain of borrowings availed by:
| 1,400 |
(a) Company including payment of interest accrued thereon; | |
(b) its step- down Subsidiaries namely SS & L Beach Private Limited and Maldives Property Holdings Private Limited including payment of interest accrued thereon through investment in such step-down Subsidiaries; | |
General corporate purposes
| Balance amount |
Key Strengths and Opportunities:
- Premium hospitality assets: Its hospitality portfolio includes marquee luxury assets that are operated by global hospitality brands like Marriott, Hilton, Ritz-Carlton, and Conard. Its luxury and upper upscale hotels in Pune achieved an ARR index of 1.44 compared with other luxury and upper upscale hotels in Pune from January 2024 to September 2024 (Source: Horwath HTL Report).
- Track record of development and acquisition-led growth in India and the Maldives: Its portfolio has grown significantly over the years, starting from 83 keys in 2007 to 2,036 keys as at September 30, 2024. As part of expansion, it has added 1,070 keys since 2019, which comprise more than 50% of the number of keys in its portfolio as at September 30, 2024.
- Renowned Promoters with global and local expertise: Panchshil Realty is a market leader in real estate development in Pune in hospitality and commercial segments, while Blackstone is an investment firm with US$1.1 trillion of AUM as of September 30, 2024. The experience of promoters enables the company to undertake strategic acquisitions and expansions into new segments, geographic markets, and development and design expertise.
- Well-positioned to benefit from strong industry tailwinds: The Indian travel and tourism sector contributed ₹19.1 trillion to GDP in 2023 and is projected to exceed ₹43 trillion by 2034. Foreign tourist arrivals are expected to grow from 9.3 million in 2023 to over 30 million by 2037 (HAI). However, new hospitality inventory supply growth is expected to be limited, with Pune seeing a 1.6% CAGR (FY24-FY27) compared to 2.7% (FY15-FY24), and Bengaluru experiencing 5.4% CAGR (FY24-FY27) compared to 5.6% (FY15-FY24) (Horwath HTL Report). The increasing demand, coupled with limited supply growth, could favourably impact the company's revenue.
Risk factors:
- Pro Forma Financials are Illustrative, Not Indicative of Future Results: The company acquired the New Portfolio in Fiscal 2025 from its promoters and may pursue similar acquisitions in the future. The Pro Forma Financial Information presented is for illustrative purposes only, demonstrating the impact of the acquisition as if it had occurred at the start of the relevant period. It may not precisely represent the company’s future financial condition or operational results.
- Dependence on Third-Party Operators and Brand Reputation: The company’s hospitality assets are operated or franchised by third-party brands, and it relies on third parties for service quality. Any negative impact on the reputation of these assets, the associated brands, or failures in quality control systems could adversely affect the company’s business, operations, and financial condition.
- Recent Losses and Integration Risks: The company incurred losses of ₹207.62 million (restated consolidated basis) in the six months ending September 30, 2024. And on a pro forma basis, the group has losses (₹ in million) in the six months ended September 30, 2024 (1,378.28), FY24 (667.46) and FY22 (1,461.97). With no established consolidated operating history, failure to successfully integrate and manage newly acquired properties could lead to continued losses.
- Seasonality in the Business: The hospitality business is subject to seasonal and cyclical variations that could result in fluctuations in results and cash flows. On a pro forma basis, the Average Room Rate for hospitality assets was Rs. 16,083.97 in the first half of FY24 and Rs. 23,288.83 in the second half of FY24.
- Low occupancy rates: The low occupancy rates at hospitality assets may adversely affect the financial condition. Considering that the acquisition transactions had been consummated at the beginning of the financial period/year, the occupancy rates are as follows: Six months ended September 30, 2024 - 60.68%, FY24 - 59.47%, FY23 - 63.67%, FY22 - 34.82%.
Financial Snapshot and Key Performance Indicators:
Particulars | Units | Company | |||
As at and for six months ended Sept 30, 2024 | As at and for FY ended | ||||
2024 | 2023 | 2022 | |||
No. of operational hotels | Number | 11.00 | 1.00 | 1.00 | 1.00 |
No. of rooms in portfolio | Number | 2,036.00 | 415.00 | 415.00 | 415.00 |
Total Income | Rs. in million | 3,889.28 | 4,947.08 | 4,417.54 | 2,375.05 |
Total income growth (%) | % | NA | 11.99% | 86.00% | NA |
Revenue from Operations | Rs. in million | 3,727.78 | 4,779.80 | 4,308.13 | 2,291.70 |
Revenue Growth (%) | % | NA | 10.95% | 87.99% | NA |
F&B revenue contribution | % | 23.25% | 23.24% | 25.46% | 23.30% |
EBITDA | Rs. in million | 1,803.97 | 3,005.59 | 2,500.92 | 1,245.97 |
EBITDA growth (%) | % | NA | 20.18% | 100.72% | NA |
EBITDA margin (%) (on Total Income) | % | 46.38% | 60.75% | 56.61% | 52.46% |
Profit /(loss) for the period/year | Rs. in million | (207.62) | 1,663.17 | 1,312.73 | 294.31 |
Profit /(loss) margin | % | (5.34%) | 33.62% | 29.72% | 12.39% |
Restated EPS - Basic & Diluted | Rs. | (2.28)# | 15.92 | 12.36 | 2.75 |
Net Worth | Rs. in million | 37,929.16 | 3,305.54 | 1,638.72 | 2,114.57 |
Return on Net Worth | % | (0.55)# | 50.31 | 80.11 | 13.92 |
Net Asset Value per Equity Share | Rs. | 289.56 | 31.65 | 15.43 | 19.74 |
Net borrowings | Rs. in million | 34,229.74 | 3,416.86 | 3,658.48 | 2,999.90 |
Net borrowings/ total equity | Number | 0.90 | 1.02 | 2.18 | 1.39 |
Average room rate | Rs. | 13,315.79 | 12,690.40 | 10,526.54 | 8,549.24 |
Average occupancy | % | 58.02% | 56.09% | 60.03% | 23.09% |
Revenue per Available Room | Rs. | 7,726.30 | 7,117.45 | 6,318.84 | 1,973.65 |
Total Revenue per Occupied room | Rs. | 26,078.23 | 28,701.87 | 24,939.30 | 26,095.95 |
Income from Annuity assets | Rs. in million | 1,528.10 | 2,323.67 | 2,030.51 | 1,354.53 |
Committed Occupancy | % | 95.55% | 98.61% | 95.73% | 94.11% |
# - Not annualised
Proforma Financial Information & Key Performance Indicators (Considering the acquisition transactions as if they had been consummated at the beginning of the financial period/year)
Particulars | Units | Company Proforma | |||
As at and for six months ended Sept 30, 2024 | As at and for FY ended | ||||
2024 | 2023 | 2022 | |||
No. of operational hotels | Number | 11.00 | 11.00 | 10.00 | 10.00 |
No. of rooms in portfolio | Number | 2,036.00 | 2,036.00 | 1,869.00 | 1,869.00 |
Total Income | Rs. in million | 8,759.04 | 19,073.78 | 17,621.87 | 11,976.09 |
Total income growth (%) | % | NA | 8.24% | 47.14% | NA |
Revenue from Operations | Rs. in million | 8,464.41 | 18,420.66 | 16,993.74 | 11,625.70 |
Revenue Growth (%) | % | NA | 8.40% | 46.17% | NA |
F&B revenue contribution | % | 24.75% | 26.14% | 26.21% | 25.34% |
EBITDA | Rs. in million | 3,638.88 | 8,697.75 | 7,711.21 | 4,924.34 |
EBITDA growth (%) | % | NA | 12.79% | 56.59% | NA |
EBITDA margin (%) (on Total Income) | % | 41.54% | 45.60% | 43.76% | 41.12% |
Profit /(loss) for the period/year | Rs. in million | (1,378.28) | (667.46) | 156.75 | (1,461.97) |
Profit /(loss) margin | % | (15.74%) | (3.50%) | 0.89% | (12.21%) |
Restated EPS - Basic & Diluted | Rs. | (7.97)# | (5.24) | (0.71) | (7.42) |
Net Worth | Rs. in million | NA* | 36,658.33 | 36,571.48 | 34,413.91 |
Return on Net Worth | % | NA* | (1.82) | 0.43 | (4.25) |
Net Asset Value per Equity Share | Rs. | NA* | 175.68 | 173.81 | 162.82 |
Net borrowings | Rs. in million | NA* | 34,071.58 | 33,623.58 | 29,845.70 |
Net borrowings/ total equity | Number | NA* | 0.93 | 0.92 | 0.87 |
Average room rate | Rs. | 16,645.18 | 19,975.99 | 17,992.55 | 20,834.14 |
Average occupancy | % | 60.68% | 59.47% | 63.67% | 34.82% |
Revenue per Available Room | Rs. | 10,099.55 | 11,880.69 | 11,456.44 | 7,255.19 |
Total Revenue per Occupied room | Rs. | 30,279.64 | 35,615.85 | 31,811.83 | 37,926.88 |
Income from Annuity assets | Rs. in million | 2,454.51 | 4,661.03 | 4,161.24 | 3,392.00 |
Committed Occupancy | % | 95.55% | 97.04% | 94.02% | 94.49% |
# - Not annualised
* - No pro forma balance sheet has been prepared as at September 30, 2024
Conclusion:
Considering the pro forma financial information, although the company has adopted an expansion strategy and an inorganic growth model, which have enabled it to expand its business and boost revenue, its bottom line has remained weak and fluctuating. The group reported losses in the six months ended September 30, 2024, and in FY24. Despite being one of the best quality service providers in the industry, its occupancy rate remains low at around 60%. Additionally, the company’s return on net worth is lower than that of its peers like Indian Hotels Company, Chalet Hotels, EIH, Lemon Tree Hotels etc. Although it might achieve profitability in the near future, as the repayment of debt using issue proceeds could reduce interest costs and potentially improve profit margins, its pro forma revenue growth slowed down in FY24, and operational risks persist in its business expansion. Considering these inherent risks in investing in the company’s stock, we recommend avoiding the IPO.
Easy & quick
Leave A Comment?