Leela Hotels IPO: Is The Rs 3,500 Crore Public Issue Worth Investing In? Here's What You Should Know

Leela Hotels IPO: The Rs 3,500 crore IPO of Schloss Bangalore Ltd, which operates The Leela Palaces, Hotels and Resorts, is open for public subscription from May 26 to May 28.

The company has already raised Rs 1,575 crore from anchor investors such as HDFC MF, ICICI Prudential MF, Mirae MF, Fidelity, Norges Bank, and others, reflecting strong institutional interest.

IPO Details

The IPO is priced in the range of Rs 413 to Rs 435 per share. It consists of a fresh issue of Rs 2,500 crore and an offer for sale worth Rs 1,000 crore by the promoter. The funds from the fresh issue will mainly be used to repay outstanding borrowings of around Rs 2,300 crore and for general corporate purposes. After the issue, the company’s market capitalisation is expected to be about Rs 14,527 crore.

Based on FY25 earnings, the IPO is valued at a P/E of 220.8x and an EV/EBITDA of 26.9x.

Leela Hotels IPO GMP

As of May 26, 2025 the Grey Market Premium (GMP) for Leela Hotels IPO is Rs 15, according to various websites tracking GMP. Based on the upper price band of Rs 435, the estimated listing price could be around Rs 450. This suggests a possible gain of about 3.45% per share on listing.

What Makes Schloss Bangalore (Leela Hotels) Stand Out?

Schloss Bangalore is one of the largest luxury hotel companies in India, with 13 operational hotels and 3,553 keys across major business and leisure destinations. The company owns five iconic hotels and manages several others under The Leela brand, which has received global recognition for service excellence.

Between FY22 and FY24, its EBITDA rose sharply from Rs 87.72 crore to Rs 600.03 crore. Its properties deliver higher revenue per room compared to the industry, and its EBITDA margins are among the best in the sector.

The company also plans to expand further by adding seven new hotels by 2028, including locations in Agra, Srinagar, and Mumbai.

What Are the Concerns?

Despite its growth, the IPO is priced expensively. A P/E of over 220x is significantly higher than peer averages, and while the company turned profitable in FY25, it is still early in its profit cycle.

Borrowings were over Rs 3,900 crore as of March 2025, and while the IPO will help reduce debt, high leverage is still a risk. The hospitality industry is also sensitive to external factors like travel demand, global events, and economic slowdowns.

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What Are Brokerages Saying?

BP Equities recommends subscribing for the medium to long term, highlighting the company’s strong brand and growth potential. Canara Bank Securities advises "Subscribe with Caution," noting the high valuation and modest profit history.

Capital Market has given the IPO a score of 42 and recommends avoiding it, though it suggests risk-seeking investors may consider it.

Final Verdict: Should You Subscribe?

According to brokerage and market analysts, Leela Hotels’ IPO offers a chance to invest in a premium hospitality brand with strong institutional backing, high growth potential, and a luxury market edge.

However, the steep valuation and short track record of profitability may not suit conservative investors. If you’re a long-term investor with a high-risk appetite and believe in the future of India’s luxury travel sector, this IPO may be worth considering, with caution.

Disclaimer: The views expressed in this article are purely informational, and Republic Media Network does not vouch for, promote or endorse any opinions stated by any third party. Stock market and Mutual Fund investments are subject to market risks, and readers are advised to seek expert advice before investing in stocks, derivatives and Mutual Funds.