Brigade Hotel Ventures: Brigade Hotel plans to raise Rs 759.6 crore through IPO to reduce debt, purchase land

ET Intelligence Group: Brigade Hotel Ventures, a wholly-owned subsidiary of Brigade Enterprises (BEL) and owner of hotels primarily across South India, plans to raise ₹759.6 crore through fresh issue to partially repay debt and purchase land. The promoter stake will fall to 74.1% after the IPO from 95.3%. About 63% of its revenue comes from Bengaluru and 35% from one property, the Sheraton Grand Bangalore, signalling high revenue concentration. Marriott contributed 43.8% of its revenue from operations in FY25. Given these factors, investors may wait and track the company’s performance after the listing.

Business

Bengaluru-headquartered Brigade Hotel Ventures owns chain-affiliated hotels and hotel rooms in South India. The company has nine operating hotels across Bengaluru, Chennai, Kochi, Mysuru and the GIFT City, Ahmedabad with total 1,604 keys. These hotels are operated by global hospitality companies such as Marriott, Accor and InterContinental Hotels Group and are in the upper upscale, upscale, upper-midscale, and midscale segments. The share of revenue from room income decreased to 62% in FY25 from 64% in FY23 while that of food and beverages increased to 33% from 31%. The average occupancy increased to 77% in FY25 from 70% in FY23.

Financials
Revenue from operations grew 15.6% annually to ₹468.3 crore between FY23 and FY25. The company reported a net profit of ₹23.7 crore in FY25 compared with net loss of ₹3.1 crore in FY23. Revenue per available room for FY25 was ₹5,138.2, compared with ₹5,015-13,448 for peers. The operating margin before depreciation and amortisation (Ebitda margin) for FY25 was 35.5% compared with 33.4-49.8% for peers. Net debt was at ₹796.9 crore, out which ₹468 crore will be repaid from the IPO proceeds. Net debt-equity ratio after the IPO works out to be 3.2.

Valuation

Considering the post-IPO equity and net profit for FY25, the company demands a price-earnings (P/E) multiple of up to 139 compared with P/Es between 32 and 229 for peers, including EIH, Juniper Hotels, Ventive Hospitality and Schloss Bangalore.