Juniper Hotels IPO: 5 Things to Know

India's surging stock market is fuelling a rush of initial public offerings (IPO)

This has made India one of the world's busiest markets for initial public offerings. It has had more companies debuting over the past year than China and Japan combined.

India's IPO market picked up last year as stocks, which had made little progress since late 2021, rallied on the back of strong corporate earnings and growing enthusiasm from domestic and international investors. Many foreign investors were hunting for attractive growth opportunities after fleeing China's tumbling markets.

The year 2023 was a tale of two halves. The primary markets experienced a dry and slow first six months, only to witness a significant surge in new stocks going public in the latter part of the year.

Amid this ongoing surge, Juniper Hotels IPO is gearing up to hit the market next week, adding another chapter to this thrilling saga.

#1 About Juniper Hotels

Juniper Hotels Limited is a luxury hotel development and ownership company. As of 30 September 2023, the company operates seven hotels and serviced apartments with 1,836 rooms.

The company's hotels and serviced apartments in Mumbai, Delhi, Ahmedabad, Lucknow, Raipur, and Hampi are landmarks in the luxury, upper upscale and upscale categories.

Grand Hyatt Mumbai Hotel and Residences is India's largest luxury hotel, while Hyatt Regency Lucknow and Hyatt Regency Ahmedabad are the biggest upper upscale hotels in their respective markets.

Hyatt Raipur is the only upper upscale hotel in Raipur.

Here are the key details of the IPO.

Issue period: 21 February 2024 to 23 February 2024

Type of issue: Book Built Issue

Price band: Rs 342-360 per share

Face value: Rs 10 per equity share

Lot size: 40 Shares

Application limit: Maximum thirteen lots for retail investors. Retail investors can make an application for a minimum of Rs 14,400 for one lot (35 shares).

Tentative IPO allotment date: 26 February 2024

Tentative listing date: 28 February 2024

#2 A Look at the Financials

The company has seen robust growth in top line revenues in the last two years.

In fact, revenue has grown nearly 4x over the last two years as the business has expanded and it has been better able to improve the capacity utilization of its keys.

While the company has posted losses in the last three years, the net loss has narrowed from Rs 1.9 billion (bn) to just Rs 15 m in the last year between FY22 and FY23.

Juniper Hotels Financial Snapshot (2021-23)

Particulars	31-Mar-21	31-Mar-22	31-Mar-23
Revenues (Rs in bn)	1.9	3.4	7.2
Revenue Growth (%)	-	78.9	111.8
Net Profit (Rs in m)	-1,994.90	-1,880.30	-15
Net Worth (Rs in bn)	5.4	3.6	3.5

Data Source: Company's Red Herring Prospectus (RHP)

#3 Peer Comparison

As per the company's red herring prospectus, these are the industry peers of Juniper Hotels.

Peer Comparison

Company	Revenue from Operations (2023) (Rs in m)	EPS (Basic) (in Rs)	Return on Net Worth (%)
Juniper Hotels	7,712.30	0.1	0.1
Chalet Hotels	11,284.70	8.9	11.9
Lemon Tree Hotels	8,749.90	1.5	9.9
The Indian Hotels Company	58,099.10	7.1	12.2
EIH	20,188.10	5	9.5

Data Source: Company's Red Herring Prospectus (DRHP)

Among the listed peers, Indian Hotels Company has the highest revenue from operations in 2023, at Rs 58 bn. Chalet Hotels stands out with a high EPS, suggesting strong profitability on a per-share basis.

However, Juniper Hotels appears to have lower financial performance compared to others in the group.

#4 Arguments in Favour of the Business

• Juniper Hotels possesses a strong capability in site selection, demonstrating expertise in choosing locations advantageous locations for hotel development.
• The company has established a unique partnership model, fostering collaboration between the asset owner and the operator brand. The strong parentage backing implies a solid support structure, potentially providing financial stability, resources, and industry expertise.
• The company aims to increase returns by diversifying revenue streams, indicating a strategic approach to business sustainability.
• Juniper Hotels demonstrates robust asset management capabilities, emphasizing enhancing operating efficiency and profitability.

#5 Risk Factors

• A notable proportion of the company's operational revenue (85.6% in FY23) is generated from three key hotels/serviced apartments in Mumbai (Maharashtra) and New Delhi. The company faces potential adverse effects if developments impacting these specific properties or their operating regions occur.
• All hotels and serviced apartments under the company's portfolio presently operate under the Hyatt brands. Long-term agreements with specific Hyatt entities for operational management and brand usage are in place. The company is exposed to significant risk if these agreements are terminated or not renewed.
• Two hotels/serviced apartments (Andaz Delhi and Hyatt Delhi Residences) and one recently acquired property (Hyatt Place Hampi) on leased land. The company may face challenges if it fails to comply with lease or license agreement terms, encounters difficulties in agreement renewal, or is unable to secure new agreements on favourable terms.
• The company and certain subsidiaries have recorded financial losses in the past. This historical trend underscores the financial challenges and risks that may persist in the company's operations.

Conclusion

Going forward, Juniper Hotels has expressed its strategic intent to develop approximately 96,583 sq. ft. of mixed-use space adjacent to the Grand Hyatt Mumbai Hotel and Residences.

The company is committed to a thorough evaluation of the potential and careful assessment of opportunities for real estate development on this land.

With the outlined expansions, the Grand Hyatt Mumbai Hotel and Residences are positioned to maintain their standing as the largest luxury hotel in Mumbai and India. The ongoing development of expanded function spaces enhances the hotel's capability to host multiple large events simultaneously.

The anticipated Compound Annual Growth Rate (CAGR) for hotel demand in India is projected to be 11.6% between FY23 and FY28. Notably, the luxury and upper upscale segments, contributing 35% of the supply share and 55% of the revenue share in 2022, are expected to play a significant role in this growth.

In the context of downstream growth, the hospitality sector aligns seamlessly with the trajectory of a rapidly growing GDP, increasing per capita income, and rising consumer spending. This positions Juniper Hotels in a favourable demand sweet spot as India makes strides towards a US$ 5 tn economy.

Nevertheless, it is always prudent to conduct thorough research before making any investment decisions.

Ensure that the investment aligns with your financial objectives and matches your risk tolerance level.

For more information on IPOs, check out the list of upcoming IPOs.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...