Leela's ₹3.5k cr IPO to test tepid market

With high average room rates, luxury hotels are well-placed to sustain bottom-line growth

- Abhinaba Saha

Leela Palaces, Hotels and Resorts' ₹3,500 crore initial public offering (IPO)—the largest ever in Indian hospitality—is testing investor appetite for luxury tourism stocks amid a tepid primary market. The listing will expand the roster of publicly traded luxury hotel chains beyond Indian Hotels Company, which runs the Taj brand and EIH Ltd, the parent of Oberoi Hotels.

The offer includes a fresh issue of shares worth ₹2,500 crore and a ₹1,000 crore offer for sale by its New York-based promoter Brookfield Asset Management, according to the company's red herring prospectus. Investors can subscribe to shares of Schloss Bangalore, the sole owner of the Leela brand, at ₹413-₹435 apiece during 26-28 May.

The IPO serves as a litmus test for sentiment in a sluggish primary market, especially with heavyweights like the National Stock Exchange await clearance to list.