Leela Hotels, officially Schloss Bangalore, has launched its ₹3,500 crore Initial Public Offering (IPO) on May 26, 2025, to capitalize on the booming luxury travel market in India. The IPO, the largest ever in the Indian hospitality sector, seeks to test investor appetite amidst a competitive landscape and a growing demand for luxury experiences. The public offering includes a fresh issue of shares worth ₹2,500 crore and an offer for sale (OFS) of stocks valued at ₹1,000 crore by promoter Project Ballet Bangalore Holdings (DIFC) Pvt Ltd. The IPO will remain open for subscription until May 28, 2025, with shares expected to be allotted around May 29 and listed on the BSE and NSE on June 2, 2025.
The IPO's price band is set at ₹413-435 per share, with a minimum lot size of 34 shares, requiring a minimum investment of ₹14,790 for retail investors. The company has reserved 75% of the shares for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 10% for retail investors. Ahead of the IPO opening, Leela Hotels raised ₹1,575 crore from anchor investors, including Goldman Sachs and Fidelity, demonstrating strong initial investor confidence.
Several brokerage firms have provided recommendations on the Leela Hotels IPO, with varied outlooks. Anand Rathi Research Team and Bajaj Broking have recommended subscribing to the IPO for the long term, citing the company's growth potential and the expected boom in the luxury hospitality sector. However, some analysts advise caution due to the company's negative earnings per share and net asset value, along with steep valuation compared to peers like Indian Hotels and EIH.
Leela Hotels plans to utilize the funds raised through the IPO to repay existing loans and for general corporate purposes. As of March 2025, the company had total borrowings of over ₹3,900 crore. By reducing its debt burden, Leela Hotels aims to improve its profitability and strengthen its financial position for future expansion. The company intends to expand its portfolio by opening five new owned hotels by 2028, requiring a capital expenditure of ₹1,132 crore.
India's luxury travel market is experiencing substantial growth, driven by increasing disposable incomes, a rising middle class, and a growing desire for unique and lavish experiences. The market generated a revenue of USD 64,515.1 million in 2023 and is projected to reach USD 123,765.2 million by 2030, growing at a CAGR of 9.8% from 2024 to 2030. This growth is fueled by both domestic and international tourists seeking premium accommodations, personalized services, and immersive activities. Leela Hotels, with its established brand and presence in major Indian cities, is well-positioned to capitalize on this trend.
However, the luxury hospitality segment faces intense competition from established players such as Indian Hotels Company (Taj brand) and EIH Ltd (Oberoi Hotels), as well as global chains like Marriott, Accor, Hilton, and Hyatt. Leela Hotels must differentiate itself through exceptional service, unique offerings, and strategic expansion to maintain its competitive edge.
Despite some financial losses reported in recent years, Leela Hotels has shown robust revenue growth and improved EBITDA. For FY25, the company recorded an average occupancy of 65%, an average room rate of ₹16,409, and revenue per available room of ₹10,696. The company's focus on the luxury segment, coupled with its debt reduction plans and expansion strategy, presents significant growth opportunities.
The Leela Hotels IPO provides investors with a chance to participate in the growth of India's luxury travel market. However, potential investors should carefully consider the company's financial performance, valuation, and competitive landscape before making an investment decision. While the IPO carries some risks, the long-term potential of the luxury hospitality sector in India makes it an attractive opportunity for investors with a high-risk tolerance and a long-term investment horizon.
