Started in 1981, Bharat Hotels Limited is New Delhi based one of the leading privately-owned domestic hotel brands in India, engaged in the business of operating and managing hotels, palaces and resorts, with a focus on the luxury segment. As at March 31, 2018, they operated 12 luxury hotels, palaces and resorts under The LaLiT brand and two mid-market segment hotels under The LaLiT Traveller brand across India's key business and leisure travel destinations, offering 2,261 rooms. In addition, they hold the exclusive rights to provide management consultancy services in connection with the operation and management of a hotel in London, The LaLiT London, which offered 70 rooms as at March 31,2018. The luxury hotels operating across India under The LaLiT brand are grouped into the following three categories:1. City hotels: The LaLiT New Delhi, The LaLiT Mumbai, The LaLiT Ashok Bangalore, The LaLiT GreatEastern Kolkata, The LaLiT Jaipur and The LaLiT Chandigarh.2. Palaces: The LaLiT Laxmi Vilas Palace Udaipur and The LaLiT Grand Palace Srinagar.3. Resorts: The LaLiT Golf & Spa Resort Goa, The LaLiT Resort & Spa Bekal (Kerala), The LaLiT Mangar and The LaLiT Temple View Khajuraho. Going forward, Bharat Hotels intends to develop three new hotels under The LaLiT brand in Ahmedabad, Mangalore and Dehradun which will, in aggregate, offer 290 rooms and 115 cottages, when completed. Company also intends to develop 50 additional rooms at The LaLiT Laxmi Vilas Palace Udaipur. Company also operates two hotels in the mid-market segment under The LaLiT Traveller brand, which are The LaLiT Traveller Jaipur and The LaLiT Traveller Khajuraho. Company intends to develop four new hotels under The LaLiT Traveller brand in Ahmedabad, Pune, Amritsar and Chitrakoot which will, in aggregate, offer 308 rooms, when completed. Further, in the F&B segment, Bharat Hotels operated 45 restaurants, bars and bakery outlets as at March 31, 2018 across its hotels in India. They have developed their own brands, such as 24/7, Baluchi, OKO, The LaLiT Boulangerie, KittySu and The LaLiT Food Truck Company. As at March 31, 2018, Company operated over 50 banquet and conference halls spread across its hotel properties in India, with total banqueting space of over 2,70,000 square feet, available for MICE events as well as weddings and other social events. They have also developed their own spa brand, Rejuve, which operates as a spa, salon and fitness center at several of their hotel properties. As at March 31, 2018, Bharat Hotels had 3,830 employees at the offices and hotels. As per financial performance, ICFL has posted total income/net profits of Rs. 396.91 cr. / Rs. 112.13 cr. (FY14), Rs. 528.06 cr. / Rs. 149.04 cr. (FY15), Rs. 644.05 cr. / Rs. 191.64 cr. (FY16) and Rs. 719.92 cr. / Rs. 210.80 cr. (FY17). For upto Q3 of FY18, it has reported net profit of Rs. 164.08 cr. on total revenue of Rs. 585.95 cr. So company has posted consistent growth over last couple of years. ICFL has posted an average EPS of Rs. 25.53 and average RoNW of 11.62% for last three fiscals. Issue is priced at a P/BV of 2.17 as per NAV of 263.96 on 31.12.17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 24. As per RHP, industry average P/E ratio is 28.66 and listed peers comparison shown in above table. So issue looks fully priced. On BRLM's front, five merchant bankers associated with this issue and have handled 58 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 6 issues opened below their offer price and 4 opened at par on listing dates. As per financials, company's growth is consistent and very good, RoNW is 11.62% for last three fiscals and issue is priced at P/E of around 24 as per latest earnings. Company is an NBFC with principal lines of business, namely corporate lending, SME lending, vehicle financing and housing financing. Last two business segments (Vehicle Finance & Housing Finance) are started in recent past and it may give further boost to company's growth, but increasing bond yields and FD rates may put pressure on margins. So we give "SUBSCRIBE FOR LONG TERM" rating to this IPO.
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