IPO: Juniper Hotels

Juniper Hotels, a luxury hotel development and ownership company, has come out with its IPO (initial public offering). Here's a breakdown of the company's strengths, weaknesses, and growth prospects to help investors make an informed decision. In a nutshell Quality: The three-year average return on equity (ROE) and return on capital employed (ROCE) of Juniper Hotels are -24.4 and 1.8 per cent, respectively. Moreover, the company has not been profitable in the last three financial years. Besides, it has also consistently had a high debt to equity. Growth: Its revenue grew four times in the last three years, primarily due to a recovery in the average occupancy and room rates post-COVID-19 pandemic. Moreover, its loss has also narrowed to Rs 1 crore in FY23 compared to Rs 199 crore in FY21. Valuation: The company has incurred a loss on a TTM basis, and therefore, price-to-earnings (P/E) can't be evaluated. However, it is valued at a price-to-book ratio of 3.0 times compared to its peer's average level of 9.3 times. Overview: Juniper is among the hotel companies that have greatly benefited from the boom in post-COVID demand in the travel and tourism industry. It also benefits from the global brand of 'Hyatt'. However, its balance sheet is debt-heavy, which needs to be taken into consideration. About Juniper Hotels Juniper Hotels is a strategic partnership between the Saraf Group and Hyatt Hotels Corporation. It is currently the largest owner (by number of keys) of Hyatt-affiliated hotels in India. It has seven hotels and serviced apartments in its portfolio. It recently acquired Chartered Hotels, which owns Hyatt Regency Lucknow, Hyatt Raipur and Hyatt Place Hampi. Strengths of Juniper Hotels Hyatt: Juniper benefits from the established brand name of Hyatt Hotels, which is known for providing a luxury experience to customers. Weaknesses of Juniper Hotels Revenue concentration: It derives more than 50 per cent of its revenues (as of September 30, 2023) from the Grand Hyatt Mumbai Hotel. Also, around 90 per cent of revenue comes from only three hotels based in Mumbai & Delhi region. Any slowdown in the specific region can significantly impact the operations. Making losses: It has been a loss-making company in the last three financial years with a debt to equity of 3.1 times as of September 30, 2023. To expand further, it has to raise additional capital. Operates in a highly competitive industry . IPO details Total IPO size (Rs cr) 1800 Offer for sale (Rs cr) 0 Fresh issue (Rs cr) 1800 Price band (Rs) 342 - 360 Subscription dates Feb 21-23, 2024 Purpose of issue Repayment of debt and general corporate purposes Post-IPO M-cap (Rs cr) 8010 Net worth (Rs cr) 2660 Promoter holding (%) 77.5 Price/earnings ratio (P/E) - Price/book ratio (P/B) 3 Financial history Key financials 2Y growth (% pa) TTM Sept 2023 FY