Ventive Hospitality Limited, a premier hospitality asset owner, is set to launch its Initial Public Offering (IPO) from December 20, 2024 to December 24, 2024. The company offers luxury properties under global brands like Marriott, Hilton, Minor, and Atmosphere. Ventive Hospitality’s portfolio includes 17 properties across India and the Maldives, targeting the luxury, upper-upscale, and upscale markets.
With an issue size of ₹1600 crore, the IPO comes at a price range of ₹610 to ₹643, with a minimum investment of ₹14,030 for a lot size of 23 shares. Let’s dive into a detailed Ventive Hospitality IPO review to assess the potential of this investment.
About Ventive Hospitality
Founded in 2002, Ventive Hospitality is a renowned player in the hospitality sector, specializing in both business and leisure luxury properties. Their extensive portfolio features high-end hotels like JW Marriott, The Ritz-Carlton, and Conrad Maldives, with a total of 2,036 keys across various regions, including Pune, Bengaluru, and Maldives.
The company has experienced substantial growth, expanding its operational capacity from just 83 keys in 2007 to 2,036 keys in 2024. The company’s assets are either owned or managed/franchised by prominent global brands, which have helped establish their presence in major cities and tourist hubs.
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Ventive Hospitality IPO Strengths
- Global Brand Recognition: Ventive’s properties are franchised by leading hotel chains like Marriott, Hilton, and Atmosphere, ensuring high standards and global recognition.
- Diverse Property Portfolio: The company operates in key business centers like Pune, Bengaluru, and Varanasi, along with the highly sought-after tourist destination, the Maldives.
- Expansion and Growth: Ventive Hospitality has grown significantly, now managing a combination of owned and acquired assets, ensuring a diverse portfolio that caters to both the business and leisure segments.
- Revenue Growth: The company has shown consistent revenue growth, with revenue from operations rising from ₹229.17 crore in FY22 to ₹477.98 crore in FY24.
- Strong Management: The company has a dedicated asset management team that works closely with operators to ensure quality service and efficient operations.
Ventive Hospitality IPO Risks
- Dependence on Third-party Operators: Ventive relies heavily on third-party brands like Marriott and Hilton for the operations of many of its assets. Any disruption in these partnerships could impact their business operations significantly.
- Geographical Concentration: A large portion of Ventive’s income is derived from properties in Pune and the Maldives, meaning any adverse developments in these regions could have a significant impact on the company’s performance.
- High Borrowing Levels: As of September 2024, Ventive has ₹3,609.52 crore in outstanding borrowings. A failure to manage this debt effectively could negatively affect the company’s financial stability.
- Legal and Regulatory Risks: The company, along with its promoters and subsidiaries, is involved in ongoing legal proceedings that could potentially harm its business prospects if the judgments turn unfavorable.
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Financial Performance
- Revenue: The company’s revenue from operations grew from ₹229.17 crore in FY22 to ₹477.98 crore in FY24, indicating a positive growth trajectory.
- Profit After Tax (PAT): Despite growth in revenue, Ventive recorded a drop in PAT from ₹131.27 crore in FY23 to ₹166.32 crore in FY24.
- Borrowings: Ventive has a significant amount of borrowings, amounting to ₹3,609.52 crore as of September 2024, which poses a risk to its financial stability.
Objects of the Issue
The funds raised through the IPO will be utilized for the following purposes:
- Repayment of Borrowings: Repaying existing loans and interest payments.
- Investment in Subsidiaries: Funding subsidiaries like SS & L Beach Private Limited and Maldives Property Holdings Private Limited.
- General Corporate Purposes: Enhancing working capital and general operational requirements.
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Ventive Hospitality IPO Review by Experts
- Dilip Davda: “May apply.” The company operates in a highly competitive and fragmented hospitality segment, but its strong brand presence and steady revenue growth make it a viable option for long-term investors. However, the IPO appears aggressively priced based on recent financial performance.
- Canara Bank Securities Ltd: “Neutral.” Given the company’s reliance on third-party operators and the heavy concentration of assets in specific regions, it’s a relatively high-risk investment.
- Indsec Securities: “Subscribe.” Despite some risks, the steady growth and future potential of the hospitality sector make this IPO worth considering for long-term investors.
- Swastika Investmart Ltd: “Avoid.” The high dependence on third-party operators and legal risks might overshadow the potential growth, making it a risky proposition.
How to Apply for the Ventive Hospitality IPO
If you’re interested in investing in the Ventive Hospitality IPO, here’s how you can apply through Zerodha:
- Visit Zerodha’s website and log in to your Console.
- Go to Portfolio and click on the IPOs link.
- Find Ventive Hospitality IPO and click the ‘Bid’ button.
- Enter your UPI ID, Quantity, and Price.
- Submit the IPO application.
- Approve the mandate in your UPI App.
Conclusion
The Ventive Hospitality IPO offers an opportunity to invest in a growing hospitality company with a diverse and high-quality asset portfolio. While the company has shown consistent growth, it faces challenges such as reliance on third-party operators and significant debt. The IPO appears aggressively priced, so it’s recommended for long-term investors with a high risk appetite.
Make sure to evaluate your financial goals and risk tolerance before applying.