The Initial Public Offering (IPO) of Juniper Hotels, a prominent name in the luxury hotel sector in India, commenced on February 21, 2024, and is set to conclude on February 23, 2024. This event marks a significant occasion in the hospitality industry, coming shortly after the listing of Apeejay Surrendra Park Hotel on the stock exchange. Juniper Hotels Ltd. distinguishes itself by focusing on the luxury, upper upscale, and upscale segments of the hotel market, boasting a portfolio that spans several key locations across India, including Mumbai, Delhi, Ahmedabad, Lucknow, Raipur, and Hampi.
The IPO of Juniper Hotels is particularly noteworthy for its substantial size, with an issue amount of ₹1,800 crore, all of which is a fresh issue without any offer-for-sale component. This move is aimed at funding general corporate purposes, along with the full or partial repayment, prepayment, or redemption of certain outstanding borrowings of the company and its recent acquisitions, Chartered Hotels Private Limited and Chartered Hampi Hotels Private Limited.
The price band for the Juniper Hotels IPO has been set at ₹342 to ₹360 per equity share, each with a face value of ₹10. The IPO has adopted a lot size of 40 equity shares, allowing subscriptions in multiples thereof. Ahead of the public issue, the company successfully raised ₹810 crores from anchor investors, allocating 2,25,00,000 equity shares at ₹360 per share. The IPO structure reserves a significant portion of the shares for different investor classes: 75% for Qualified Institutional Buyers (QIBs), up to 15% for Non-Institutional Investors (NIIs), and the remaining 10% for Retail Investors.
In terms of financial performance, Juniper Hotels Limited reported a remarkable increase in its profit after tax (PAT) by 99.2% and a surge in revenue by 1086.6% for the fiscal year ending March 31, 2023. Despite these impressive figures, the IPO experienced a slow start on its opening day, with the subscription status standing at 11% according to data available from the Bombay Stock Exchange (BSE). Detailed subscription data revealed that the retail investors’ portion was subscribed 52%, the NII portion at 6%, and the QIB portion had yet to see bookings.
Looking at the company’s positioning within the industry, Juniper Hotels operates alongside listed peers such as Chalet Hotels Limited, Lemon Tree Hotels Limited, The Indian Hotels Company Limited, and EIH Limited, each with varying price-to-earnings (P/E) ratios that offer a comparative perspective on Juniper Hotels’ market valuation.
One intriguing aspect of the Juniper Hotels IPO is its grey market premium (GMP), which stood at +8. This figure indicates a positive sentiment among investors, suggesting that shares of Juniper Hotels were trading at a premium of ₹8 over the IPO price in the grey market. Consequently, this premium suggested an estimated listing price of ₹368 per share, representing a 22.2% increase over the IPO price of ₹360, thereby reflecting investors’ willingness to pay above the issue price.
Despite the optimistic GMP, investor opinions on subscribing to the Juniper Hotels IPO are mixed. Brokerage firms and analysts have provided varied insights into the investment potential of this IPO. Hensex Securities Pvt Ltd, for instance, acknowledges the company’s unique partnership model, expertise in site selection, and its position to benefit from industry trends. However, it maintains a neutral stance on the issue, advising investors to proceed with caution.
On the other hand, industry expert Dilip Davda highlights Juniper Hotels’ status as a leading gross profit earner within the hospitality sector, backed by a global partnership with the renowned “Hyatt” brand. Despite noting the company’s negative P/E ratio due to its current loss-making status, Davda suggests that the IPO may appeal to well-informed investors seeking substantial returns over the medium to long term.
In conclusion, the Juniper Hotels IPO presents a unique investment opportunity within the Indian hospitality sector, supported by the company’s robust financial performance, strategic positioning, and promising industry outlook. However, potential investors should carefully consider the mixed reviews from analysts and the inherent risks of investing in the IPO market. As with any investment decision, it is advisable to conduct thorough research and possibly consult with financial advisors before subscribing to the IPO.