Ventive Hospitality IPO

Ventive Hospitality Limited is an Indian hospitality company that mainly owns hospitality assets with a primary focus on luxury offerings across business and leisure segments. All of the company’s hospitality assets are operated by or franchised by global operators, including Marriott, Hilton, Minor, and Atmosphere. Its luxury hospitality assets comprise JW Marriott, Pune, The Ritz-Carlton, Pune, Conrad, Maldives, Anantara, Maldive,s and Raaya by Atmosphere, Maldives. The company has a successful track record of developing and acquiring marquee hotel assets across various geographies and different hospitality segments. As of March 31, 2024, the company’s operating portfolio includes seven hospitality assets with 1,331 keys developed by the company and four hospitality assets with 705 keys acquired by the company.

Ventive Hospitality Limited has filed its Draft Red Herring Prospectus (DRHP) with SEBI for a fresh issue to raise Rs. 20,000 million by issuing equity shares with a face value of Rs. 1 each. The IPO is fully a book-built issue with no Offer For Sale.

SWOT Analysis of Ventive Hospitality Limited

Strengths and Opportunities	Risks and Threats
The company has premium hospitality assets operated and managed by global hospitality brands such as the Ritz-Carlton in Pune, Conrad, Maldives, and Anantara, Maldives.	The company lacks a consolidated operating history and has incurred pro forma losses in FY24 and FY22. Challenges in integrating acquired properties and managing operational costs could adversely affect performance.
The company’s hospitality assets collectively contributed over 80% of its pro forma revenue from hotel operations for each of FY24, FY23, and FY22.	The company heavily relies on third-party operators to generate income. A majority of hospitality assets (8 out of 11) are operated under brands like Marriott and Hilton. Termination or non-renewal of agreements with these operators poses a financial risk.
The company has an established track record of development and acquisition. As of March 31, 2024, the company’s operating portfolio included seven hospitality assets with 1,331 keys developed by the company and four hospitality assets with 705 keys acquired by the company.	The company reported a pro forma loss of Rs. 667.46 million in FY24 and Rs. 1,461.97 million million in FY22. These losses indicate significant challenges in managing expenses and achieving profitability post-acquisitions
The company is backed by skilled and experienced promoters. One such promoter is Blackstone, which is the world’s leading investment firm with US$1.1 trillion of assets under management.	A significant portion of the pro forma total income is derived from four of its largest hospitality assets (which contributed to 58.26% of its pro forma total income for FY24). Any adverse developments affecting such assets could hurt the business, financial condition, cash flows and results of operations.
The company has a proven track record of active asset management. All of its hotels are either newly built or have been recently renovated within the past two years, in line with its aim to provide a superior experience for guests.	A significant portion of the company’s pro forma total income is derived from assets concentrated in a few geographical locations (53.29% and 38.24% of its pro forma total income for FY24 from assets located in Pune and Maldives, respectively), creating financial risk in case of any adverse developments affecting such assets or locations.
The company is well-positioned to benefit from the hospitality industry growth, where the growth is expected to rise at a CAGR of 2.5% in Pune from FY24 to FY27 and at a CAGR of 3.3% in Bengaluru from FY24 to FY27.	The company’s annuity assets contributed to 24.44% of its pro forma total revenue for FY24. If there is a decline in demand for office and retail properties, the company’s business may be adversely affected.
The company’s office assets have an average Committed Occupancy of 96.65% as of March 31, 2024, and over 80% of their Leasable Area was leased to multinational corporations as of March 31, 2024.	Fixed and recurring costs incurred by the company to carry out its operations and the company’s inability to effectively manage such costs may have an adverse effect on its business.
The company’s assets command a premium of over 29% above the average rental for Pune as of March 2024 due to their generally superior quality compared to the market average.	The company heavily relies on third parties for the quality of services at its hospitality assets. Any adverse impact on the reputation of its hospitality assets, or the brands under which they operate, or a failure of quality control systems at its hospitality assets could adversely affect the business and its revenue.
The company’s assets are occupied by marquee tenants such as HSBC, Deutsche Bank, Nokia, Vodafone, PwC, Sephora, Starbucks and Vero Moda.	Negative customer reviews or unfavourable media coverage of the company’s hospitality and annuity assets could harm its reputation or brand, impact its ability to attract customers and tenants and harm its financial condition.

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More About Ventive Hospitality Limited IPO 

Ventive Hospitality Limited is an Indian hospitality company that focuses on luxury offerings across business and leisure segments such as resorts and spas. Among listed hospitality companies in India, the company’s pro forma revenue was the third highest in FY24 and FY23 and second highest for FY22. Its pro forma EBITDA was the third highest in FY24 and second highest for FY23 and FY22.

Here is a summary of the company’s hospitality assets:

Hospitality Assets (Completed)	Location	Segment	Number of Keys
JW Marriott, Pune	Shivajinagar, Pune, Maharashtra	Luxury	415
The Ritz-Carlton, Pune	Yerwada, Pune, Maharashtra	Luxury	198
Anantara, Maldives	Dhigu, Veli, and Naladhu, Maldives	Luxury	197
Conrad, Maldives	Rangali, Maldives	Luxury	151
Raaya by Atmosphere, Maldives	Raaya, Maldives	Luxury	167
Marriott Suites, Pune	Koregaon Park, Pune, Maharashtra	Upper Upscale	200
DoubleTree by Hilton, Pune	Chinchwad, Pune, Maharashtra	Upscale	115
Oakwood Residences, Pune	Naylor Road, Pune, Maharashtra	Upscale	83
Courtyard by Marriott, Pune	Hinjewadi IT Park, Pune, Maharashtra	Upscale	153
Marriott Aloft Whitefield, Bengaluru (to be rebranded to AC by Marriott)	Whitefield, Bengaluru, Karnataka	Upscale	166
Marriott Aloft ORR, Bengaluru	Outer Ring Road, Bengaluru, Karnataka	Upscale	191
Total			2,036

Hospitality Assets (Under Development)	Location	Segment	Estimated Number of Keys
Varanasi Hotel, under a non-binding MOU with Marriott (for a potential Marriott brand)	Varanasi, Uttar Pradesh	Upper Upscale	167
Expansion of Marriott Aloft Whitefield, Bengaluru (to be rebranded to a potential AC by Marriott brand under a non-binding MOU with Marriott)	Whitefield, Bengaluru, Karnataka	Upscale	120
Sri Lanka hotel, under a non-binding MOU with Marriott (for a potential Ritz-Carlton Reserve brand)	Pottuvil, Sri Lanka	Luxury	80
Total			367

Leading Premium Hospitality Assets 

Ventive Hospitality Limited has a robust portfolio of developed and acquired hospitality assets that are operated by global hospitality brands. Some of its luxury hospitality assets include JW Marriott, Pune, The Ritz-Carlton, Pune, Conrad, Maldives, Anantara, Maldives, and Raaya by Atmosphere, Maldives. The luxury hospitality assets in its portfolio collectively contributed to over 80% of its pro forma revenue from hotel operations for FY24, FY2,3, and FY22. The company’s hospitality assets in India benefit from large-scale event spaces and award-winning F&B offerings, and they are located close to key transport and social infrastructure areas.

Awards and Recognition

Ventive Hospitality Limited’s hotels and other assets have been ranked amongst the best in their respective markets and categories and have received various recognised awards.

Details	Award
Conrad, Maldives	Indian Ocean’s Leading Hotel 2023, World Travel Awards
Anantara, Maldives	Indian Ocean’s Leading Leisure Hotel 2023, World Travel Awards
The Ritz-Carlton, Pune	Condé Nast Gold List, 2023 (Region – Global)
TripAdvisor Travelers’	Choice Awards Best of the Best Hotels – India, 2024
Leading Luxury Hotel/Resort,	2022 (Region – South Asia), South Asian Travel Awards
JW Marriott, Pune	Best Hotel for Business Travellers 2022 (India), CNBC
Ranked 10th in the Luxury Segment, TripAdvisor (Travellers Choice Best of the Best 2024) – World

Business model For Ventive Hospitality Limited 

Ventive Hospitality Limited focuses on owning, managing, and developing premium hospitality assets in India and the Maldives. The company primarily generates revenue through the operation of high-end hotels, which are managed by internationally renowned brands like Marriott, Hilton, and Anantara under long-term operating agreements.

• Revenue Stream: One of the company’s major revenue streams is the revenue earned by paying customers or through the premium charged to third-party operators such as Marriott and Hilton.

• Seasonal Travel: The company earns higher revenue in India and Maldives due to higher demand for hospitality assets during seasonal travel. Travel demand is relatively stronger from October to March, and the company earns higher revenues during this time.

Industry Outlook 

Ventive Hospitality Limited operates in the hospitality sector, developing and acquiring various hospitality assets. The Indian travel and tourism sector contributed Rs. 19.1 trillion of GDP in 2023 and is expected to contribute over Rs. 43 trillion by 2034. Domestic travel visits grew at a 13.5% CAGR between 2001-2019. As per the Hotel Association of India (HAI), foreign tourists in India will cross 30 million by 2037 (from 9.2 million in 2023). Furthermore, Maldives received 1.9 million foreign tourists in 2023, with further growth expected given its strong reputation as a leading beach and resort destination.

• Underpenetrated Market: As of March 31, 2024, India has only 188k chain-affiliated hotel rooms across segments, compared to 56k keys in San Francisco and 150k keys in London as of 31 December 2023. The Indian hospitality sector is thus underpenetrated compared to global counterparts in terms of the ratio of rooms to commercial office stock, with the top 8 cities of India having 118 keys per msf of office space, compared to 637 keys per msf of office space in London and 486 keys per msf of office space in San Francisco as of 31 December 2023.

• Shift Towards Chain-Affiliated Hotels: The demand for and establishment of chain-affiliated hotels has increased drastically in the last ten years and is expected to increase further in the coming years. International hotel chains are also gaining market share, with the inventory share of international chains increasing from 21% in FY01 to 45% as of FY24.

How Will Ventive Hospitality Limited Benefit? 

Ventive Hospitality Limited is poised to benefit from the expected robust demand in the Indian travel industry. Indian domestic travel demand reached 2.3 billion visits in 2019 and has been recovering immensely, with 1.7 billion visits in 2022 post-COVID-19 pandemic. As per the WTTC research, t domestic visitor spending rose by 15% in 2023, surpassing the 2019 level. Leisure, weddings and social demand, MICE demand, and an increased number of sports / other events have significantly contributed to overall hotel revenues.

Furthermore, there has been a significant rise in spiritual tourism as the sector is projected to expand at 9% CAGR, from US$ 60 bn in 2023 to US$ 130 bn by 2032, also gaining from GOI’s PRASHAD Scheme and Swadesh Darshan 2.0 programme. Foreign tourist arrival (FTA) reached 9.2 million in CY23 and recovered 85% compared to 10.9 million in CY19. As per HAI, FTA is expected to grow and cross 30 million by 2037.

The continued growth of domestic and international travel is expected to benefit the travel industry and, as a result, the Ventive Hospitality Limited business. The company can develop or acquire new hospitality assets to meet the increasing demand and earn higher revenues and profits in return.

Ventive Hospitality Limited IPO Overview

Ventive Hospitality Limited is launching its Initial Public Offering (IPO) to raise Rs. 20,000 million through a fresh issue of equity shares with a face value of Rs. 1 each. The company may also undertake a pre-IPO placement of up to Rs. 4,000 million, which would reduce the size of the fresh issue proportionally if completed. The IPO will be executed as a 100% book-built issue, with the equity shares proposed to be listed on both the BSE and NSE.

The issue includes a reservation for eligible employees, and a significant portion of shares is allocated for Qualified Institutional Buyers (QIBs), Non-Institutional Bidders (NIBs), and Retail Individual Bidders (RIBs). Subject to regulatory guidelines, a portion of the QIB allocation may also be reserved for anchor investors.

Why is Ventive Hospitality Limited Going Public? 

Ventive Hospitality Limited is launching its IPO to fulfill the following purposes:

1. Repayment or Prepayment of Borrowings: Approximately Rs. 16,000 million will be allocated to partially or fully repay the borrowings of the company and its step-down subsidiaries, including SS & L Beach Private Limited and Maldives Property Holdings Private Limited. This repayment also includes the accrued interest.
2. General Corporate Purposes: A portion of the proceeds will be reserved for general corporate purposes, supporting the company’s overall operations and strategic initiatives.
3. Enhancing Brand Image and Public Market Presence: One other objective of the company to launch its IPO is to enhance its brand visibility among existing and potential customers and create a public market for its equity shares in India.

Ventive Hospitality Limited IPO Details 

Category	Details
Issue Type	Book Built Issue IPO
Total Issue Size	Fresh Issue: ₹1,600.00 Cr
Offer For Sale	Rs. 0
IPO Dates	December 20, 2024 to December 24, 2024.
Price Bands	Price range to be determined
Lot Size	23 Shares
Face Value	Rs. 1 per share
Listing Exchange	BSE, NSE

Ventive Hospitality Limited IPO Important Dates 

IPO Activity	Date
Basis of Allotment Date	Thursday, December 26, 2024
Refunds Initiation	Friday, December 27, 2024
Credit of Shares to Demat	Friday, December 27, 2024
IPO Listing Date	Monday, December 30, 2024

Lead Managers

Lead Manager	Contact Person(s)	Telephone	Email
JM Financial Limited	Prachee Dhuri	+91 22 6630 3030	ventive.ipo@jmfl.com
Axis Capital Limited	Jigar Jain	+91 22 4325 2183	ventive.ipo@axiscap.in
HSBC Securities and Capital Markets	Sumant Sharma, Harshit Tayal	+91 22 6864 1289	ventiveipo@hsbc.co.in
ICICI Securities Limited	Sohail Puri, Gaurav Mittal	+91 22 6807 7100	ventive.ipo@icicisecurities.com
IIFL Securities Limited	Yogesh Malpani, Pawan Kumar Jain	+91 22 4646 4728	ventive.ipo@iiflcap.com
Kotak Mahindra Capital Company Limited	Ganesh Rane	+91 22 4336 0000	ventive.ipo@kotak.com
SBI Capital Markets Limited	Sylvia Mendonca	+91 22 4006 9807	ventive.ipo@sbicaps.com

Ventive Hospitality Limited IPO Valuation Overview 

KPI	Value as of March 31st, 2024
Earning Per Share (EPS) (Basic)	Rs. 15.92
Price/Earning (P/E) Ratio	N/A
Return on Net Worth (RoNW)	50.31%
Net Asset Value (NAV)	Rs. 31.65
Net Worth	Rs. 3,305.54 million
ROCE	NA
EBITDA	NA

Detailed Peer-to-Peer Analysis For Ventive Hospitality Limited

Here is a detailed comparison of Ventive Hospitality Limited with its listed industry peers:

Particulars	Face Value (Rs. )	Revenue from operations (Rs. m)	EPS (Basic) (Rs. )	EPS (Diluted) (Rs. )	P/E	RoNW (%)	Net Worth (Rs. m)	NAV per Share (Rs. )	EV/EBITDA (FY 24)	Market Cap/Total Income (FY 24)	Market Cap/Tangible Assets (FY 24)
Ventive Hospitality	1	4,779.80	15.92	15.92	50.31	50.31%	3,305.54	31.65	•	•	•
Ventive Hospitality (Proforma)	1	18,420.66	-5.24	-5.24	•	-1.82%	36,658.33	175.69	•	•	•
Chalet Hotels Limited	10	14,172.52	13.54	13.53	60.06	15.03%	18,508.68	90.08	32.29	11.62	3.86
Samhi Hotels Limited	1	9,573.93	-14.67	-14.67	NA	NA	10,385.40	47.63	22.45	4.63	1.93
Juniper Hotels Limited	10	8,176.63	1.46	1.46	264.35	0.90%	26,552.81	119.34	28.16	10.39	2.98
The Indian Hotels Company Limited	1	67,687.50	8.86	8.86	75.09	13.13%	1,01,287.10	71.16	39.95	13.62	14.87
EIH Limited	2	25,112.70	10.22	10.22	37.84	16.58%	40,863.60	65.34	22.6	9.21	10.83
Lemon Tree Hotels Limited	10	10,711.23	1.88	1.88	70.93	11.75%	15,464.28	19.52	23.15	9.81	3.36
Apeejay Surrendra Park Hotels Limited	1	5,789.70	3.82	3.82	46.31	5.74%	11,977.50	56.13	18.25	6.38	3.53

Ventive Hospitality Limited IPO Strengths 

Grade A Annuity Assets

Ventive Hospitality Limited is known for its premium luxury assets, which are complemented by Grade A annuity assets. The company’s luxury hospitality assets include well-known hospitality assets such as JW Marriott, Pune, The Ritz-Carlton, Pune, Conrad, Maldives, Anantara, Maldives, and Raaya by Atmosphere, Maldives. The company’s luxury assets make a healthy contribution to its revenue as they collectively contributed to over 80% of its pro forma revenue from hotel operations for each of FY24, FY23, and FY22. One of the strengths of the company is how it benefits from large-scale event spaces and award-winning F&B offerings, as they are located close to key transport and social infrastructure areas. As of March 31st, 2024, the company has the largest share of luxury hotel key inventory in Pune, consisting of 64%. The assets are of superior quality as they command an ARR premium compared to other properties within their respective markets, on average, in India and the Maldives.

Established Track Record Of Development And Acquisition

The company has a successful and established track record of developing marquee hospitality assets, executing landmark acquisitions, and utilising its design capabilities to create value in its acquisitions and establish a presence in desirable destinations across the Indian Ocean Region. As of March 31, 2024, the company has an operating portfolio of seven hospitality assets with 1,331 keys, which the company developed, and four hospitality assets with 705 keys, which the company has acquired. The company has a business model that focuses on submarkets and locations based on their proximity to airports and transport hubs, central business and commercial districts, and areas with high tourism potential.

Promoters With Global And Local Expertise

The company’s promoters are Panchshil Promoters and the BRE Promoters. The company highly benefits from the deep knowledge of local markets and the overall experience of the promoters in running its business operations. The Panchshil Group is affiliated with Panchshil Realty, one of India’s leading luxury real estate developers. The BRE Group is affiliated with Blackstone, the largest investor in hotels globally based on the number of keys, with nearly 1,63,000 keys as of June 30, 2024. These promoters have extensive experience in acquiring, developing, and managing large-scale real estate, hospitality, and commercial projects. The company leverages the experience of the promoters both globally and within India to undertake strategic acquisitions and expansions into new segments and geographic markets, as well as development and design expertise.

Professional And Experienced Management Team

The company boasts a professional management team and a Board of Directors who come from diverse backgrounds and have expertise in various fields, such as private equity and investments, real estate, and hospitality. The company benefits greatly from the guidance and vision of Atul Chordia, who has over thirty years of experience in the real estate sector and is one of its promoters. The company has a strong management team with significant industry experience and domain knowledge leading key aspects of its business.

Effective Active Asset management

The company has an established track record of active asset management, and its hospitality assets are destinations of choice due to their high quality, premium positioning, and unique offerings. The company has designed its asset management practices to provide a superior experience for guests, tenants, and consumers. They are driven by comprehensive procedures aimed at improving the operational performance of its assets through increased occupancy rates, revenue generation, and enhanced cost efficiencies.

Long-term ESG Commitments

The company is dedicated to maintaining strong and long-term ESG (environmental, social, and governance) standards and upholding its mission: “Integrate responsible practices in all facets of its operations and help to create a more sustainable and inclusive world.” The company is currently working to achieve the following targets:

• Achieve energy consumption from green energy sources to more than 50% by FY26 and achieve 75% by FY28.

• 100% water recycling systems in all its hotels by FY28.

• Increase gender diversity in its workforce and ensure that at least 30% of women constitute its workforce by FY30.

• Achieve net-zero greenhouse gas (GHG) emissions by FY34.

Utilisation Of Net Proceeds

Ventive Hospitality Limited is planning to use the Net Proceeds from the IPO for the following purposes:   1. Repayment or Prepayment of Borrowings: The company will use Rs. 16,000 million to repay or prepay certain borrowings, including accrued interest, availed by the company and its step-down subsidiaries, SS & L Beach Private Limited and Maldives Property Holdings Private Limited. This constitutes approximately 43.73% of the total outstanding borrowings of Rs. 36,576.91 million (as of August 31, 2024). This repayment will reduce debt servicing costs, improve the debt-equity ratio, and enable better utilisation of internal accruals for growth.   2. General Corporate Purposes: The remaining net proceeds will be used for general corporate purposes, including but not limited to:

• Strategic initiatives

• Enhancement and upkeep of hotel assets (renovations and refurbishments)

• Funding organic and inorganic growth opportunities, such as acquisitions

• Strengthening marketing capabilities and brand-building

• Meeting working capital requirements

• Managing contingencies and other general business requirements

Ventive Hospitality Limited Financial Performance 

Particulars	March 31, 2024	March 31, 2023	March 31, 2022
Equity share capital	104.44	104.44	107.14
Other Equity	3,240.10	1,573.28	2,043.73
Total equity	3,344.54	1,677.72	2,150.87
Net Worth	3,305.54	1,638.72	2,114.57
Total income	4,947.08	4,417.54	2,375.05
Revenue from operations	4,779.80	4,308.13	2,291.70
Restated profit for the year	1,663.17	1,312.73	294.31
Earnings per share— Basic & Diluted (Rs.)	15.92	12.36	2.75
Return on Net Worth (%)	50.31	80.11	13.92
Net Asset Value per Equity Share (Rs.)	31.65	15.43	19.74
Borrowings	4,126.08	4,251.67	4,190.01

Key Insights From The Financials 

• Revenue Growth: Revenue from operations increased consistently from Rs. 2,291.70 million in FY 2022 to Rs. 4,308.13 million in FY 2023 and further to Rs. 4,779.80 million in FY 2024.
• Profit/Loss: The restated profit for the year saw a remarkable increase from Rs. 294.31 million in FY 2022 to Rs. 1,312.73 million in FY 2023 and Rs. 1,663.17 million in FY 2024.
• Earnings Per Share (EPS): EPS grew from Rs. 2.75 in FY 2022 to Rs. 12.36 in FY 2023 and Rs. 15.92 in FY 2024. This reflects the company’s ability to generate higher earnings per unit of equity.
• Borrowings: Borrowings remained relatively consistent, with Rs. 4,190.01 million in FY 2022 and Rs. 4,126.08 million in FY 2024, showcasing controlled leverage.

 Key Strategies of Ventive Hospitality Limited 

1. Developing and Expanding the Asset Base The company intends to grow its portfolio and increase its market share in these markets through organic and inorganic growth opportunities. The company also plans to focus on expanding beyond the current markets in regions offering significant and compelling growth prospects, which will allow it to broaden its geographic footprint. The company plans to develop an 80-key villa-style luxury resort under a non-binding MOU with Marriott (for a potential Ritz-Carlton Reserve brand) at Pottuvil, near Yala East National Park and Arugam Bay Beach in Southeast Sri Lanka.
2. Driving Organic Growth One of the company’s core strategies is to drive demand through premiumisation and guest satisfaction. To maintain its long-term organic growth, the company has recently undertaken strategic renovations and refurbishments and proactively phased out corporate accounts in India that generated comparatively lower ARRs over the past few years. As a result, the company’s hospitality assets have witnessed an ARR growth of 38.93% in India and 52.79% in the Maldives from FY20 to FY24 and have outperformed hospitality assets in their comparable markets.
3. Leveraging award-winning F&B and Amenities Out of the top 10, seven of the fine dining restaurants in Pune are located at the company’s hospitality assets as per TripAdvisor’s rankings as of September 1, 2024. W Marriott, Pune, features the top three fine dining restaurants in Pune according to TripAdvisor rankings as of September 1, 2024. The company wants to focus on creating unique dining experiences, such as regular menu updates, cooking shows, specialist-led classes, and special beverage deals, to increase its average revenue per customer.
4. Optimising Event SpacesThe company aims to continue assessing alternative and optimal utilisation of event spaces at its hospitality assets to diversify its revenue sources and to increase its share of the revenue from the sale of food and beverages and banquet income. The company wants to continue promoting its event spaces extensively, including through wedding planners and property management teams, to further increase the number of upscale events and weddings at its hotels.
5. Selective Acquisitions The company intends to utilise the IPO Net Proceeds towards repayment or prepayment, in part or full, of certain of the borrowings availed by the company and its subsidiaries, SS & L, and MPHPL, including the repayment of the accrued interest thereon. Following such repayments or prepayments, the company expects the committed revenue from rental income from its annuity assets to be sufficient to service its annual debt repayment obligations. It also plans to utilise the generated cash flows from its hospitality assets to undertake further growth initiatives.