Saj Hotels has recorded a disappointing debut on the stock market, with shares listing at ₹55 on the NSE SME, reflecting a 15.4% discount from the ₹65 IPO price. The company is actively engaged in the hospitality industry, providing a diverse range of offerings, including traditional resort accommodations, villa rentals, and restaurant properties.

The Saj Hotels IPO, amounting to ₹27.62 crores, consisted entirely of a Fresh Issue of 42.50 lakh shares. The subscription period for the IPO opened on September 27, 2024, and closed on October 01, 2024. The allotment is expected to be finalized around October 03, 2024, with a tentative listing date on or about October 07, 2024.

The share price for the IPO was set at ₹65 per equity share, with a minimum lot size of 2,000 shares. Retail investors were required to invest a minimum of ₹1,30,000, while High-Net-Worth Individuals (HNIs) needed to invest ₹2,60,000 for two lots of shares.

As of October 1, 2024, the live subscription status indicated that the IPO was subscribed 1.97 times, reflecting a lack of robust investor interest. Additionally, the Grey Market Premium (GMP) is expected to be around ₹0, indicating no expected gains upon listing. It is essential for investors to understand that trading based on GMP is unregulated and not recommended, as it merely reflects demand and supply in an informal market.

Objectives of Saj Hotels Limited IPO

The proceeds from the Fresh Issue are intended for:

₹1,700 lakhs for capital expenditures related to the expansion of existing resort properties.

₹400 lakhs for funding working capital requirements.

₹332.50 lakhs for general corporate expenses.

Financial Performance Overview

Saj Hotels has demonstrated steady growth in financial performance over recent fiscal years:

Revenue for Fiscal 2024 was ₹1,455.49 lakhs, compared to ₹1,282.19 lakhs in Fiscal 2023.

EBITDA improved to ₹652.57 lakhs in Fiscal 2024 from ₹322.43 lakhs in Fiscal 2023.

Profit after Tax rose to ₹345.40 lakhs in Fiscal 2024, up from ₹347.99 lakhs in Fiscal 2023.

The pre-issue EPS was ₹2.90, while the post-issue EPS stands at ₹2.14. The pre-issue P/E ratio is 22.41x, with the post-issue ratio rising to 30.37x, compared to an industry average of 27.25x. The company’s Return on Capital Employed (ROCE) for FY24 is 26.36%, and Return on Equity (RoAE) is 19.91%, indicating a fully priced IPO.

Given the company’s financial performance and the current market situation, the GMP suggesting 0% potential gains leads to a recommendation for investors to avoid the Saj Hotels Limited IPO for both short-term listing gains and long-term investment considerations. The valuation and performance of the IPO may not present an attractive opportunity for prospective investors.

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