The Saj Hotels IPO is set to hit the market from September 27, 2024, to October 1, 2024. As a significant player in the hospitality industry, Saj Hotels offers a diverse range of accommodation and service options across various locations. This blog post provides a comprehensive review of the IPO, including essential details, company background, financial performance, strengths and risks, and investment considerations.
Saj Hotels IPO Details
- Bidding Dates: September 27, 2024 – October 1, 2024
- Minimum Investment: ₹1,30,000
- Lot Size: 2,000 Shares
- Price Range: ₹65 per share
- Issue Size: ₹27.63 Crore
- Listing Date: October 7, 2024
- Face Value: ₹10 per share
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About Saj Hotels
Founded in 1981, Saj Hotels operates in the hospitality sector, providing accommodations and a variety of services including restaurants, spas, and event venues. The company caters to both leisure and business clients, offering facilities for conferences, weddings, and other social gatherings. Saj Hotels boasts properties in three prime locations: Mahabaleshwar, Malshej, and Pench, making it an attractive choice for tourists and business travelers alike.
Strengths of Saj Hotels
- Diverse Revenue Streams: Besides standard room bookings, Saj Hotels generates revenue from various services, including restaurant operations and event hosting. This diversification helps cushion the business against fluctuations in occupancy rates.
- Expansion of Offerings: In 2023, the company expanded its portfolio by leasing a restaurant and bar property, showcasing its adaptability to changing market demands.
- Strategic Investments: Saj Hotels has further diversified its business by acquiring a 50% stake in My Own Rooms Dot In Private Limited, enhancing its reach and offerings in the hospitality space.
- Long-standing Experience: With over four decades in the industry, Saj Hotels brings a wealth of experience and established operational frameworks to its business.
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Risks and Challenges
While there are notable strengths, potential investors should also be aware of the risks associated with investing in Saj Hotels:
- Historical Losses: The company incurred a loss of ₹1.20 crore in FY21, highlighting past financial struggles.
- Cash Flow Concerns: Saj Hotels has experienced negative cash flows in the past. If these patterns continue, they could negatively impact operations and growth.
- Legal Issues: The company, along with its group companies and directors, is involved in ongoing legal proceedings. Adverse outcomes in these cases could affect business prospects.
- Leased Properties: One of Saj Hotels’ properties, Saj in the Forest, is built on leased land under a joint venture agreement. Failure to meet the terms could harm business operations.
- Contingent Liabilities: The company has contingent liabilities of ₹36.28 crore, which have not been accounted for in the restated financial statements. Inability to manage these liabilities could pose a significant risk.
Financial Performance
To assess Saj Hotels’ financial health, let’s examine key metrics over recent years:
Revenue Growth
| Fiscal Year | Revenue (₹ Cr) | Profit (₹ Cr) |
|---|---|---|
| FY21 | 8.05 | -1.20 |
| FY22 | 12.83 | 1.32 |
| FY23 | 12.71 | 3.48 |
Total Assets
| Fiscal Year | Total Assets (₹ Cr) |
|---|---|
| FY21 | 32.86 |
| FY22 | 96.26 |
| FY23 | 98.92 |
Application Details
Investors looking to apply for the Saj Hotels IPO can consider the following details:
- Regular Investors: Minimum application of ₹65 per share for up to ₹2 Lakh.
- High Networth Individuals (HNIs): Can apply for ₹2 – 5 Lakh.
Lot Size Breakdown:
| Application Type | Lots | Shares | Amount |
|---|---|---|---|
| Retail (Min) | 1 | 2,000 | ₹130,000 |
| HNI (Min) | 2 | 4,000 | ₹260,000 |
Key Performance Indicators (KPI)
As of January 31, 2024, here are the key financial metrics for Saj Hotels:
- Market Capitalization: ₹104.81 Crore
- Return on Equity (ROE): 19.91%
- Return on Capital Employed (ROCE): 26.36%
- Debt/Equity Ratio: 0.17
- Profit Margin: 24.23%
Objectives of the IPO
Saj Hotels intends to utilize the funds raised from the IPO for:
- Capital Expenditure towards the expansion of existing resort properties.
- Funding working capital requirements.
- General corporate expenses.
Should You Apply for the Saj Hotels IPO?
Investment Verdict: [Apply]
According to market expert Dilip Davda, investors should consider applying for the Saj Hotels IPO. The company has shown steady progress in its financial performance post-pandemic. Although it faced a setback in FY24 due to heavy rains and amortization provisions related to expansion plans, the overall trend in the hospitality sector remains favorable. While the pricing appears aggressive based on FY24 earnings, the growing demand for hospitality services makes this a potential medium- to long-term investment opportunity.
Saj Hotels IPO Registrar
- Registrar: Satellite Corporate Services Private Limited
- Phone: +91-22-28520461/462
- Email: service@satellitecorporate.com
- Website: Satellite Corporate Services
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