Ventive Hospitality IPO: The hospitality business witnessed a moderate response from investors as the IPO received a 1.28 times subscription on the second day of the bidding window
Ventive Hospitality GMP: The bidding window of the initial public offering will conclude today. While the retail individual investors (RIIs) category saw a 1.76 times subscription, the qualified institutional buyers (QIBs) segment was subscribed 1.22 times. Meanwhile, the non-institutional investors (NIIs) portion recorded a 1.07 times subscription.
Last week, the Blackstone-backed hospitality business raised Rs 719 crore from anchor investors. While the bidding response seemed decent, the IPO has received a 'Subscribe for long term' rating from most of the brokerages. This is largely owing to the company's heightened loss figure and dependence on third-party operators/franchisees for service quality.
However, the last month of 2024 is often considered positive for the D-street, as visible in past trends. And the primary market seems to be witnessing a similar trend.
So far, the grey market premium (GMP) is signalling a decent debut for the company. GMP often refers to the price at which a company's shares trade in the grey market before being listed on the official exchanges.
As of 10:00 am on Tuesday, the shares of Ventive Hospitality were trading at a GMP of Rs 54, commanding a single digit premium of over 8 per cent in the grey market.
While the bidding window will be closing today, the tentative date of listing is fixed for next week, December 30 (Monday.)
The company operates in the upscale/ luxury segment of the hospitality sphere, catering to premium customers. Its hotels/ hospitality assets are either run directly by global hospitality giants like Marriott and Hilton or operate under their franchise agreements.
While this gives the company a reputational edge over its domestic competitors in the industry, the same can turn out to be a risky factor as any brand image issues or quality control failures could impact its operations and eventually the bottom-line.
Besides this, the company is witnessing an increasing loss figure. In FY23, the company remained profitable as PAT stood at Rs 15 crores. However, in FY24, the company experienced a loss of Rs 66.75 crore. As of Q2FY25, the company has incurred a loss of Rs 137 crores.
At the upper price band of Rs 643, the company’s IPO values it at a market capitalisation of Rs 1,50,167 million. Based on its FY24 earnings, this translates to a PE ratio of 90x, indicating a steep valuation, Anand Rathi brokerage stated in its report.