Evaluating the Ventive Hospitality IPO: Is it Right for You?

The domestic travel & tourism sector, which contributed ₹19.1 trillion (5.6% of GDP) in CY23, is projected to reach ₹21.2 trillion in CY24 and soar beyond ₹43 trillion by 2034. Riding this wave of growth, Ventive Hospitality Limited is set to make its stock market debut, offering investors a unique opportunity to tap into the booming luxury and upscale hospitality sector.

In this blog, we’ll delve into the key details, financial performance, peer comparison, sector outlook, risk factors, and, most importantly, whether you should subscribe to this Ventive Hospitality IPO.

Ventive Hospitality IPO is open for subscription from (20th Dec 2024) today onwards!

Ventive Hospitality IPO Details:

• IPO Open Date 20th December 2024, Friday
• IPO Close Date 24th December 2024, Tuesday
• Price Band  ₹610 to ₹643 per share
• Lot Size 23 shares
• Face Value ₹1 per share
• Issue Size at upper price band ₹1600 crore (Fresh Issue ₹1600 crore)
• Listing exchanges NSE, BSE
• Cut-off time for UPI mandate confirmation by 5 PM on December 24, 2024

The tentative timeline for the IPO is as follows: 

• Basis of Allotment 26th December 2024, Thursday
• Initiation of Refunds (if not allotted) 27th December 2024, Friday
• Credit of Shares to Demat (if gets allotments of shares) 27th December 2024, Friday
• Listing Date 30th December 2024, Monday 

About the Company

Ventive Hospitality Limited, incorporated in 2002, is in the hospitality business with a primary focus on business and leisure segments. The company’s hospitality assets are operated by or franchised by global operators such as Marriott, Hilton, Minor and Atmosphere. Its portfolio consists of 11 hotels in India & Maldives with 2,036 keys across luxury, upper upscale and upscale segments. The assets are located in prime areas of Pune and Bangalore, along with one of the top tourist destinations in the Maldives. Additionally, the company has 4 Grade-A annuity assets that they offer for commercial & retail leasing. Apart from a pleasant accommodation experience, they offer several F&B (food & beverage) restaurants as a part of their hospitality venture. As of 30th September 2024, they have 70 outlets, including Alto Vino, Tao Fu, Ukiyo, Ithaa and more. Ventive Hospitality Limited operates in two key business segments:

1. Hotel Operations: This segment’s revenue comes from room income (44%), food & beverage (46%), and services like banquets and memberships. Key properties include JW Marriott (Pune), Ritz-Carlton (Pune), Courtyard by Marriott (Pune), Anantara (Maldives), Conrad (Maldives), and Raaya by Atmosphere (Maldives). As of 30th September 2024, of the 11 properties, seven hotels (1,331 keys) were developed by the company and its group (Panchshil), while others were acquired.
2. Annuity Assets: This segment mainly generates revenue from rental income (87%), maintenance and parking (12%), along with miscellaneous income from leasing, construction, and fit-outs. As of 30th September 2024, Ventive had 3.4 million square feet of leasable area in Pune with ~96% occupancy. This segment includes Business Bay, ICC Offices, ICC Pavilion, and Panchshil Tech Park, leased to prominent tenants like HSBC, Deutsche Bank, Nokia, Vodafone, PwC, Sephora, Starbucks, and Vero Moda.

Let’s look at the revenue breakup.

Sector Outlook in India

The domestic travel & tourism sector contributed ₹19.1 tn in CY23 (5.6% of GDP) and is expected to contribute about ₹21.2 tn in CY24 and over ₹43 tn by 2034. As of CY23, foreign tourist arrivals (FTA) stood at 9.3 mn in India and are expected to reach 30.4 mn by 2037. Domestic travel as of 2022 stood at 173 cr and is expected to reach 500 cr by 2030, driven by leisure, recreation, weddings, and MICE (meetings, incentives, conferences & exhibitions). Pilgrimage-related travel has also grown significantly, with the spiritual tourism sector projected to expand at 9% CAGR, from $60 bn in 2023 to $130 bn by 2032.

Globally, regions like Tokyo, London, Singapore, and San Francisco have hotel keys (in ‘000) of 162, 150, 77, and 56, respectively, whereas India has a total of 94 keys as of December 2023 with lower ADRs (average daily rate) comparatively. In India, the top 15 hotel chains, ranging from Marriott to Leela, constitute 77% of the total room inventory as of H1 FY25. Out of these 15, 7 hotels (Marriott, IHCL (Indian Hotels Company Ltd), Radisson Hotel Group, ITC, Accor, Lemon Tree, and Hyatt) constitute 54% share of the room inventory.

Read our blog to learn more about 5 Star Rating: Best Hotel Stocks in India.

Financial Performance of the Ventive Hospitality IPO

Ventive Hospitality Limited has shown consistent financial growth over the past three years. Here are the key financial highlights of Ventive Hospitality Limited:

• Revenue Growth: The company has consistently shown strong revenue growth over three years. Net sales increased from Rs. 229 Cr in 2022-2023 to Rs. 478 Cr in 2024-2025.
• Profitability: The company has been profitable in all three years. Profit after tax (PAT) rose from Rs. 29 Cr in 2022-2023 to Rs. 166 Cr in 2024-2025.
• Earnings per Share (EPS): Adjusted EPS, a measure of profitability per share, has also increased significantly from Rs. 3 in 2022-2023 to Rs. 16 in 2024-2025 2024-03.

While the company’s total expenditure has increased over the years, it hasn’t outpaced the revenue growth. This is evident from the rising Profit Before Interest, Taxes, Depreciation, and Amortization (PBITD).

Ventive’s operational efficiency stands out compared to its peers, such as The Indian Hotels Company Ltd, EIH Ltd, and Chalet Hotels Ltd. While its revenue is smaller than that of major competitors like Indian Hotels and Chalet Hotels, it outperforms them in margins. Ventive’s EBITDA margin of 59.4% and PAT margin of 34.8% are notably higher than those of most of its industry peers. For instance, Indian Hotels’ EBITDA margin stands at 31.9%, while Chalet Hotels’ is 41.3%.

Objectives of the Issue 

The primary aims of the Ventive Hospitality IPO are to strengthen the company’s financial position, promote operational growth, and improve overall efficiency.

1. Repayment or Prepayment of Borrowings: Ventive intends to use ₹1,400 crore of the net proceeds to repay or prepay loans, which will reduce interest liabilities and improve the company’s balance sheet.
2. General Corporate Purposes: The remaining amount will be used to support the company’s operational and strategic initiatives.

These objectives are crucial for ensuring that Ventive Hospitality IPO is well-positioned to achieve sustainable growth, strengthen its competitive edge, and expand its footprint in both domestic and international markets.

Let’s now look at the risk factors of Ventive Hospitality IPO.

Risk Factors

While the Ventive Hospitality IPO appears promising, investors should consider the following risks:

• Geographical Concentration: A significant portion of Ventive’s revenue is derived from Pune and the Maldives, making it vulnerable to region-specific risks.
• High Debt Levels: Due to its recent acquisitions, Ventive has a substantial debt burden, which could impact cash flows and profitability.
• Dependence on Key Operators: Many of Ventive’s properties are managed by third-party operators like Marriott and Hilton. Any disruption in these relationships could affect revenue.
• Market Competition: The hospitality sector is highly competitive, with established players like Indian Hotels and Chalet Hotels offering similar upscale services.
• Economic Slowdowns: Slowdowns in the economy, especially in the tourism sector, could affect occupancy rates and RevPAR (Revenue Per Available Room).

Should you subscribe to Ventive Hospitality IPO?

Ventive’s great operational performance, high margins, and growth possibilities in the hotel sector make it a promising investment opportunity. However, potential investors should consider the large debt load and reliance on third-party operators. If you want to get involved in India’s burgeoning luxury hospitality business, Ventive Hospitality could be a good long-term investment. Before making a choice, carefully consider your risk tolerance and investing objectives.

Before investing in the Ventive Hospitality IPO, you should carefully consider both the potential benefits and the associated risks. In this blog, you will get an in-depth analysis of the main benefits and potential drawbacks of this investing opportunity. The Ventive Hospitality IPO has received an “Average” rating from StockEdge’s expert panel, indicating that the opportunity is balanced and cautious. 

For more detailed information, we’ve created a comprehensive Ventive Hospitality IPO Note, which includes a deep dive into the company’s financials and a SWOT analysis, helping you understand its growth potential.

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