HVS Monday Musings: Indian Hospitality Industry Explores Path to IPO

India’s initial public offering (IPO) market has flourished in recent years, and 2021 was a banner year with more than 60 IPOs as the country’s stock market hit new highs, ending fears over the COVID. This positive trend has continued in 2022, with 19 companies launching their IPOs so far. However, IPOs in the hospitality industry have been rare, with Lemon Tree Hotels and Chalet hotels being the most notable, but even those that were pre-pandemic.

However, OYO resuscitated its IPO plans last week by filing new financial documents with the Securities and Exchange Board of India (SEBI), which could pave the way for the revival of big-ticket hotel IPOs in the country. Go forward, Apeejay Surrendra Park Hotels and SAMI Hotelswho had both filed their draft documents with SEBI before the pandemic, could relaunch their IPO plans, while ICC may consider registering its hotel division separately. This is encouraging news, as there are currently very few good quality hotel companies listed on the stock exchange.

Due to improving fundamentals and industry performance, shares of the country’s leading listed hotel companies have rallied strongly in recent months, reflecting developments in the Indian hospitality industry and renewed interest investors for the sector. In reality, IHCL is the biggest gainer among all hotel stocks globally since the pandemic.

Monthly Stock Closing Prices (January 2020 – YTD 21st September 2022)

Source: BSE website and HVS research - Photo by HVS
Source: BSE website and HVS research – Photo by HVS

With improving market sentiment and an optimistic outlook for the hospitality industry, several hospitality companies – both operators and owners – may now be considering ramping up operations to achieve the scale and size needed to go public. . Using the IPO route will help hotel companies raise funds for their expansion plans, deleverage their balance sheets, or provide an exit for existing investors. In addition, new listings of good quality hotel companies will also provide the depth needed to create a hotel industry-specific index that can be used as a benchmark to track industry performance, helping investors make better decisions. enlightened in the future.

Mandeep S Lamba
President (South Asia), New Delhi
+91 (124) 488 5552
HVS

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Christina A. Kroll