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Samhi Hotels Limited, Refiles Its Draft Red Herring Prospectus With SEBI

24 Apr 2023

After filing its initial Draft Red Herring Prospectus (DRHP) with the SEBI in 2019, Samhi Hotels Limited withdrew it citing unfavorable market conditions. However, recently, the company filed its DRHP once again, showing its interest in raising capital via an IPO. Want to know more about the upcoming IPO from Samhi Hotels Limited? Continue reading to find out all about it. 

Company Overview 

Established in 2010, Samhi Hotels Limited is a company that’s involved in the business of hotel and asset management. As of February 28, 2023, the company had the third-largest inventory of owned and leased keys in the country. 

The portfolio of Samhi Hotels includes 3,839 keys across 25 operating hotels located in 12 different major cities including Ahmedabad, Hyderabad, Bengaluru, Chennai, Pune and National Capital Region (NCR). 

The company has a strong and long-standing working relationship with world-renowned hotel operators such as IHG, Marriott and Hyatt. Samhi Hotels even operates hotels under these three brands, Sheraton and Holiday Inn Express. 

Company Financials

The DRHP filed by the company on March 31, 2023, has listed key financial metrics for the financial years - FY20, FY21 and FY22. Here’s a closer look at some of them. 

(figures are in ₹ crores)

Particulars

As of September 30, 2022 FY22 FY21 FY20
Equity Share Capital 7.62 7.62 7.62 7.62
Net Worth -887 -702.6 -259.2 -218.5
Total Borrowings 2,768.10 2,597.60 2,424.40 2,106.10
Total Income 354 333.1 179.2 627.6
Restated Profit / (Loss) -184.6 -443.2 -477.7 -299.8
Diluted Earnings Per Share (EPS) -24.2 -58.12 -62.64 -39.65

Note: Except for the Diluted Earnings Per Share (EPS) all other figures are expressed in ₹ crores. 

Key Strengths of the Company 

Samhi Hotels Limited has listed out some of the key strengths that its business has in the Draft Red Herring Prospectus. Let’s take a quick look at what they are. 

  • Strong ability and track record of taking over dislocated hotels and pushing for rerating through a combination of renovation and rebranding
  • Sector tailwinds enhance the company’s portfolio scale and diversification 
  • Long-standing track record of efficient management of hotels
  • Seasoned management team and strong governance 

Key Risks for the Company 

As an investor, you need to pay attention to the risks faced by the company’s business. Here’s an overview of a few of the key risks. 

  • Substantial revenue from IHG, Marriott and Hyatt hotels are from only a few locations 
  • Few hotels are located in buildings leased by third parties 
  • Operations are dependent on the company’s ability to attract and retain qualified personnel 
  • Legal proceedings against directors, company and subsidiaries 
  • Indian hospitality industry is prone to seasonal variations

Details of the IPO

In the first DRHP that was filed by Samhi Hotels Limited, the company planned to raise about Rs. 1,800 to Rs. 2,000 crores via an IPO. However, in the DRHP that it refiled on March 31, 2023, the company downsized the issue. Now, it plans to raise Rs. 1,000 crores by issuing fresh shares to the public.  

In addition to the fresh issue, there’s also an offer for sale (OFS) component. Four selling shareholders of Samhi Hotels Limited are planning to offload around 90 lakh equity shares via this upcoming IPO. 

As with every other public issue in the Indian stock market, the IPO of Samhi Hotels Limited also has reservations for certain segments of investors. The company has set aside a major portion of the issue (75%) for Qualified Institutional Buyers (QIBs). Out of the remaining 25%, 15% has been allocated to Non-Institutional Investors (NIIs) and 10% to retail investors. 

Objects of the Offer

The company plans to utilize the net proceeds from the Rs. 1,000-crore fresh issue for satisfying the following objectives. 

  • For the pre-payment or repayment of some of the borrowings made by the company and its subsidiaries including any accrued interest 
  • For general corporate activities 

Conclusion

Samhi Hotels Limited is one of the few hotel and asset management companies in India. Despite the many advantages and strengths that the company possesses, it has been making losses consistently over the past three financial years. Also, the hospitality industry in India is still recovering from the impact of Covid-19 and is prone to seasonal changes. 

However, as more information regarding the public issue, especially the IPO price comes in it would be easier to decide whether to invest in the IPO or not. That said, if you feel like investing in this public issue, it is a good idea to open a demat account right away. This will ensure that you’re ready to invest as soon as the public issue opens up. Visit Motilal Oswal today to open a 2-in-1 trading and demat account for free through an entirely online process. 

 

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