Juniper Hotels IPO Review is coming up with its IPO issue of Rs. 1800 Cr which will open on 21st February 2024. The issue will close on 23rd February and be listed on the exchange on 28th February 2024. In this article, we will look at the Juniper Hotels Limited IPO Review 2024 and analyze its strengths and weaknesses. Keep reading to find out!
Table of Contents
Juniper Hotels IPO Review
About the Company
Juniper Hotels is a owner and developer of luxury hotels and the largest owner of the Hyatt affiliated hotels in India. The Company has a portfolio of 7 hotels and service apartments and operate over 1836 keys.
The Company has hotels and service apartments present across Mumbai, Delhi, Ahmedabad, Lucknow, Raipur & Hampi. Juniper Hotels is jointly held by Saraf Hotels & Two Seas Holding Holdings, an indirect subsidiary of Hyatt Group.
Juniper has two luxury hotels, Grand Hyatt Mumbai Hotel and Andaz Delhi. It has 4 upper upscale hotel called Hyatt Delhi residences, Regency Ahmedabad, Regency Lucknow And Hyatt Raipu. It also has one upscale hotel called Hyatt Place Hampi.
The Company has its hotels spread across 1.43 Lakh SqFt in Commerical area and 1.05 Lakh SqFt in the MICE Area. MICE stands for Meetings, Incentives, Conferences and Exhibitions. MICE was created as a separate category with the hospitality segment to distinguish it from other forms of tourism.
About the Industry
India’s Chain affiliated room supply is currently at 1.7 Lakh hotel rooms as of FY23. It had its best growth years from FY08-FY15 growing at 15% CAGR. From FY16-FY23 the industry has grown at a stable rate of 6.1% CAGR. The industry is expected to add around 60,000 rooms from October 2023 – March 2027.
The Concentration of Luxury and Upper Upscale segments has continued to dilute leading to increased demand for upscale segment. In the future around 25% of the new supply from the luxury upper unscale segment. 24%, 20%, and 31% is expected to come from upscale, upper midscale and midscale economy class respectively.
Foreign Trade Arrivals touched a high in FY19, before dipping to a new low in FY20 due to the rise of the pandemic. SInce then the demand has reached 87.5% of FY24. FY23 witnessed strong demand growth over FY19 mainly due to pent up corporate and MICE travel demand.
Strong growth rates are expected to continue in FY24, just before slowing down in early FY25 due to elections. Long term FTA demand has grown at a CAGR of 9.8% from FY08-23 and is expected to grow by 11% in FY26 & FY27.
The industry is expected to be driven by greater demand from MICE travel and Leisure travel. Weddings & other social events will also play a major role in driving up great demand for the segment.
Juniper Hotels – Financials
Juniper Hotels reportedly had an average occupancy rate of 76% in FY23, which increased by nearly 2200bps points from 54% in FY22. Currently its Average Occupancy stands at 74.84%. Revenue per Available room was at Rs. 9875 as of FY23, which has consistently increased from Rs. 5657 in FY21 at a CAGR of 32%.
The Company earns nearly 48% of its revenue from Hotel Rooms, while 33% comes from the Food & Beverage segment. Service Apartments brings in another 13%. Juniper’s reported revenue from operations of Rs. 667 Cr in FY23, which increased by 116% from Rs. 309 Cr. The Company is however yet to turn a profit as it has consistently reported losses in the past three years.
Net Losses have decreased from Rs. 199 Cr in FY21 to Rs. 1.49 Cr in FY23. The Company paid about Rs. 26.6 Cr in Finance costs to furnish its high borrowings. No debt on its balance sheet would have ensured that the Company would break even in FY23. The Company has a long-term borrowing of Rs. 2009 Cr. The debt burden has increased by 7% CAGR from FY21-23.
Juniper Hotels- Key Players
Juniper Hotels is the smallest listed player in the industry, nearly one-tenth of India’s largest hotelier The Indian Hotels Company. Its is also the only entity to be making losses in FY23. Since, the Company reports losses we will not be able to Compare its Price to earnings or return ratios against its competitors.
Strengths of the Company
- Expertise in finding real estate opportunities: The Company has made sure to establish a strong present in India’s key market and have its luxury properties placed in the heart of the most prime locations of the country.
- Increasing Operational efficiency and Profitability: Juniper has been successful at scaling its revenues as well as margins, without affecting customer experience.
- Diversified revenue streams: Juniper offers luxury hotels as well as service apartments catering to two separate requirements. During the pandemic, although demand for hotels dropped down 65%, demand for service apartment remained robust.
- Welcoming Industry Trends: India’s yound & growing population along with growing per Capita GDP are factors that Juniper & other hoteliers will benefit from.
- Experienced Management: The Company is run by promoter & founder Mr. Arun Kumar Saraf. He has over 5 decades of experience in the hotel industry.
Weaknesses of Company
- Not yet Profitable: The Company as well as its subsidiariesn have not yet been successful in turing Juniper into a profitable entity. The high debt structure weighs down & eats up profitability of the company.
- Delay in loan repayments by subsidiary: During the pandemic, a subsidiary of the Company was unable to pay out loans leading to delay of payments past its due date. The Company has however created a loan restructuring proposal which has been accepted by the consortium of lenders.
- Revenue Concentration: Two luxury and residences hotels owned by the Company Grand Hyatt Mumbai & Andaz Delhi are responsible for nearly 90% of the Company’s total revenue. This shows a severely high dependency rate on these two prime properties.
- Brand reputation of the affiliate brand: As the hotel owned by Juniper affiliated with the Hyatt Group, it is critical for the Hyatt brand to succeed for Juniper to perform well.
Juniper Hotels – GMP
As of the date of writing this article, the Grey Market Premium for the shares was Juniper Hotels was not yet published. We will be updating the article with the respective expected as soon as its GMP get updated.
Key IPO Information
| Particulars | Details |
|---|---|
| IPO Size | Rs. 1800 |
| Fresh Issue | Rs. 1800 |
| Offer for Sale (OFS) | - |
| Opening date | 21 February 2024 |
| Closing date | 23 February 2024 |
| Face Value | Rs. 10 |
| Price Band | Rs. 342 - 360 |
| Lot Size | 40 Shares |
| Minimum Lot Size | 1 Lot (40 Shares) |
| Maximum Lot Size | 13 Lots (520 Shares) |
| Min. Investment | Rs. 14,400 |
| Listing Date | 28 February 2024 |
Promoters: Arun Kumar Saraf, Saraf Hotel Ltd, Two Seas Holding Ltd and Juniper Investments Ltd
Book Running Lead Manager: JM Financial Ltd., CLSA India Pvt Ltd and ICICI Securities Ltd.
Registrar to the Offer: KFintech Ltd
The Objective of the Issue
- Rs. 1500 Cr worth of the Net Proceeds will be utilized by the Company to repay the loan taken as part of the recent acquisition of CHPL and CHHPL
- The remaining amount will be used for General Corporate Purposes.
Conclusion
In conclusion, Juniper Hotels IPO Review presents a mixed picture. The company has established a strong presence in key markets with prime real estate holdings. However, the Company is yet to manage its debt burden & turn Juniper into a profitable venture and revenue concentration on a few properties continues to remains a risk.
Nevertheless, the experienced management and favorable industry trends are positives, but investors should carefully assess the risks and potential for growth before considering this IPO.
Just a few days back we wrote about a very similar venture, Apeejay Surrendra Park Hotels, which was hotel group affiliated with The Park Hotels. If you were to bet on either one of these Companies, then which one would be your pick? Let us know in the comments below.
Written by Nasir Hussain
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