Samhi Hotels IPO: Last Day For Subscription On September 18; Apply Or Not? Latest GMP Here!

Samhi Hotels IPO: The 1,370.10 crore initial public offering (IPO) continued to witness dull demand even on the second day with the overall issue recording 12% subscription of the total offered equity shares. Except retail investors, institutional and HNIs showed tepid response to the IPO. The last day for the subscription is September 18. Should you apply or not for the IPO?

As per NSE data, the IPO received bids of 77,89,502 equity shares on Friday, subscribing by 12% of the total offered size of 6,25,29,831 equity shares.

On Day 2, the Retail Individual Investors (RIIs) category subscribed by 58% against its total reserved portion of 1,14,34,033 equity shares. While non-institutional investors (NIIs) subscribed by 7% against the reserved size of 1,71,51,050 equity shares for the category. Lastly, the qualified institutional buyers (QIBs) showed dull bidding towards its reserved size of 3,39,44,748 equity shares.

On September 16th, the grey market premium (GMP) of the IPO is at Rs 10 per share. As per TopShareBrokers, with the price band of 126.00, SAMHI Hotels IPO's estimated listing price is ₹136 (cap price + today's GMP).The expected percentage gain/loss per share is 7.94%.

The IPO is not available for subscription on September 16th and 17th due to the weekend holidays. The IPO will close on September 18.

The 100% book building has a price band of Rs 119 to Rs 126 per share having a face value of Rs 1 each. The bid lot size is 119 Equity Shares and in multiples thereof.

While JM Financial and Kotak Mahindra Capital Company are the book-running lead managers for the IPO, while Kfin Technologies is the registrar of the issue.

Should you subscribe to the IPO?

In its IPO note, SMIFS Limited said, "Samhi Hotels is looking to benefit from: i. Opportunity to grow revenues from its growth in the number of keys and renovation project its upper scale and upper mid-scale segment. ii. Rising average occupancy along with rising room rate boosts prospects. iii. Strong government support to boost growth in the industry which will benefit Samhi as a market leader. Total income increased significantly from Rs 3,331.04 million for FY22 to Rs 7,614.20 million for the FY23 due to increases in revenue from operations and other income."

Also, SMIFS highlighted that the company's restated loss for the year decreased by 23.61% from Rs 4,432.53 million for FY22 to Rs 3,385.86 million for the FY23. Meanwhile, with occupancy levels reaching above 70% levels across its portfolio during the FY23, it intends to focus on increasing ARR and improving operating margins, while driving occupancies further. At the upper end of the price band, the
EV/EBITDA translates to ~17.41x which is lower than the peer average. Thus the IPO is attractively priced."

Further, Nirmal Bang's IPO note said, "SAMHI Hotels Ltd (incl. ACIC Portfolio) has delivered topline performance with a growth of 15.5% CAGR (excl. ACIC portfolio at 6.8% CAGR) between FY20-23 compared to 7.9% average growth of listed peers. With this issue, the management is aiming to deleverage its balance sheet with repayment of ~Rs 1,150 crore of its total debt of Rs 2,900 crore."

"The same is expected to improve its SHL's profitability and to generate high free cash flow for the subsequent years. As on Mar'23, ROCE (proforma incl ACIC portfolio) stood at 6.6% which is further expected to improve on the back of debt repayment and growth planned for the upcoming few quarters. The issue is valued at 15.8x to EV/EBITDA based on FY23
proforma financials which is discount to average valuation of 30.2x EV/EBITDA for its listed peers. Thus, we recommend SUBSCRIBE to the issue," Nirmal Bang's note added.

The proposed equity shares in the IPO will be listed on BSE and NSE.

After the IPO, the allotment of equity shares is expected to take place on September 22, followed by initiation of refunds on September 25, and credit of shares in Demat accounts on September 26. As per Chittorgarh, the IPO is expected to list on September 27.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.