On May 26, 2025, Schloss Bangalore Limited, the parent company of the renowned The Leela Palaces, Hotels & Resorts, launched its much-awaited initial public offering (IPO), targeting ₹3,500 crore. Initially rumored to be a ₹35,000 crore offering, the IPO was resized to reflect reduced debt and market conditions. Backed by global investment powerhouse Brookfield, this IPO positions The Leela to strengthen its foothold in India’s booming luxury hospitality sector. Below is an engaging overview of the IPO, an analysis of Schloss Bangalore’s financials, and insights into whether investors should consider subscribing.
IPO Structure and Purpose
The Leela Hotels IPO, open for subscription from May 26 to May 28, 2025, includes a fresh issue of equity shares worth ₹2,500 crore and an offer-for-sale (OFS) of ₹1,000 crore by promoter Project Ballet Bangalore Holdings (DIFC) Pvt Ltd, a Brookfield entity. The price band is set at ₹413–₹435 per share, with a minimum lot size of 34 shares, requiring retail investors to invest at least ₹14,042 at the upper end. The IPO is slated to list on the BSE and NSE on June 2, 2025, with an estimated market capitalization of ₹14,527 crore at the upper price band.
The fresh issue proceeds, approximately ₹2,300 crore, will primarily be used to repay or prepay borrowings of Schloss Bangalore and its subsidiaries, including Schloss Chanakya, Schloss Chennai, Schloss Udaipur, and TPRPL. The remaining funds will support general corporate purposes, capped at 25% of the gross proceeds. The OFS enables Brookfield to partially divest its stake, signaling confidence in The Leela’s future while unlocking value for shareholders.
Financial Snapshot: A Recovery in Progress
Schloss Bangalore, incorporated in 2019, operates 13 luxury hotels with 3,553 keys across 10 key Indian cities, covering 80% of international and 59% of domestic air traffic in FY25. Its portfolio includes iconic properties in Bengaluru, Chennai, New Delhi, Jaipur, and Udaipur, with five fully owned hotels and a flagship spa at The Leela Palace Bengaluru in collaboration with luxury wellness brand Soneva.
The company’s financials show a strong post-COVID recovery. In FY22, it reported revenues of ₹415 crore but posted a net loss of ₹319 crore. By FY24, revenues grew to ₹1,226 crore, with losses reduced to ₹2.1 crore. For FY25, Schloss Bangalore achieved revenues of ₹1,406.56 crore and a profit after tax (PAT) of ₹47.66 crore, a remarkable 2341% PAT increase year-over-year. However, its borrowings stood at ₹3,908.75 crore as of March 2025, highlighting the need for debt reduction via IPO proceeds. The company’s net worth rose to ₹3,604.99 crore, reflecting a stronger financial position.
Despite a ₹36 crore loss for the period ending May 2024, Schloss Bangalore’s revenue growth and profitability trends signal resilience. Its enterprise value (EV) to EBITDA multiple for FY25 is estimated at 22.5x, competitive within the luxury hospitality sector. Initiatives like cost optimization and leadership programs such as LLDP and LEAD further enhance operational efficiency.
P/E Matrix Comparison
| Company | Market Cap (₹ Cr) | EPS (₹) | P/E Ratio (x) | EBITDA Margin (FY24) | RevPAR CAGR (FY19–24) |
|---|---|---|---|---|---|
| Schloss Bangalore (IPO) | 14,527 | 1.43 | 288.8–304.2 | 48.92% | 11.8% |
| Indian Hotels (IHCL) | 1,00,000 | 9.15 | 76.5 | ~35% | 10.0% |
| EIH Limited | 25,000 | 11.20 | 35.7 | ~40% | 9.5% |
| Chalet Hotels | 20,000 | 14.60 | 65.1 | ~38% | 8.8% |
| Juniper Hotels | 8,000 | 2.25 | 160.0 | ~30% | 7.5% |
| ITC Hotels | 50,000 | 4.80 | 83.3 | ~33% | 9.0% |
Note: P/E ratios for peers are based on indicative share prices and FY25 estimated financials, derived from market data and industry reports. Schloss Bangalore’s P/E is calculated based on IPO price band and FY25 PAT.
Market Potential and Expansion Plans
India’s luxury hospitality market is set for significant growth, with the target audience for luxury products projected to grow from 70 million to 200 million families over the next five years. Schloss Bangalore is well-placed to tap this demand, with plans to add 678 keys across seven new hotels by 2028, a 19.08% increase in its portfolio. Supported by Brookfield’s global expertise managing 41,000 keys across 179 properties, The Leela is poised to capitalize on rising tourism and affluent consumer spending. Its Soneva partnership and strategic presence in high-traffic cities further align with evolving consumer preferences for premium experiences.
The IPO’s anchor book, raising ₹1,575 crore from 47 investors including Fidelity, Norges Bank, Whiteoak, HDFC Mutual Fund, and ICICI Prudential MF, reflects strong institutional interest.
Should We Apply?
Reasons to Consider Subscribing:
- Premium Brand and Market Leadership: The Leela is a leading luxury hospitality brand in India, with a diversified portfolio and strategic backing from Brookfield, enhancing its growth potential.
- Financial Turnaround: Revenue growth from ₹415 crore in FY22 to ₹1,406 crore in FY25, coupled with FY25 profitability, showcases a robust recovery. Debt reduction through IPO proceeds will further strengthen its balance sheet.
- Growth Opportunities: With India’s luxury hospitality market expanding, Schloss Bangalore’s planned addition of 678 keys and focus on wellness offerings position it for long-term growth.
- Grey Market Buzz: The IPO is trading at a grey market premium (GMP) of ₹12–₹20, suggesting a potential listing price of ₹455, about 4.6% above the upper price band, indicating positive investor sentiment.
Potential Risks:
- High Debt Burden: Borrowings of ₹3,908.75 crore remain significant, and any operational or economic challenges could impact financial stability.
- Recent Losses: The ₹36 crore loss for the period ending May 2024 raises concerns about short-term profitability, though it aligns with seasonal hospitality trends.
- Market Sensitivity: The IPO size was reduced by 30% from ₹5,000 crore due to market conditions, and hospitality stocks are vulnerable to economic downturns.
- Valuation: At 22.5x EV/EBITDA, the valuation is reasonable but not a bargain compared to peers, potentially limiting short-term upside for aggressive investors.
Investment Outlook: Long-term investors optimistic about India’s luxury hospitality sector may find the Leela Hotels IPO appealing, given its strong brand, growth plans, and institutional backing. However, cautious investors might prefer to monitor post-listing performance due to debt levels and recent losses. Retail investors can consider applying for the minimum lot size to balance risk and reward, while high-net-worth individuals may explore larger allocations based on the anchor round’s success. Always consult a financial advisor before investing.
Final Thoughts
The Leela Hotels IPO offers a unique chance to invest in a premier luxury hospitality brand at a transformative moment for India’s tourism sector. Schloss Bangalore’s financial recovery, strategic expansion, and Brookfield’s support make it a compelling opportunity, though risks like debt and market volatility warrant caution. As the IPO opens on May 26, 2025, it’s poised to draw significant attention from investors seeking exposure to India’s luxury market.
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