Schloss Bangalore IPO Guidance by Paresh Gordhandas, CA & Research Analyst.
The company is India’s only institutionally owned and managed pure-play luxury hospitality platform, operating under the prestigious “The Leela” brand. It is engaged in the ownership, management, operation, and development of luxury hotels and resorts across the country.
Founded in 1986 by the Late Captain C.P. Krishnan Nair, The Leela brand has been synonymous with refined Indian hospitality. It has earned significant global recognition, being ranked #1 among the world’s best hospitality brands in 2020 and 2021, and among the top three in 2023 and 2024 by the Travel + Leisure World’s Best Awards. Since January 2021, the brand and its properties have received over 250 awards, underscoring its impact and leadership in India’s luxury hospitality segment.
Portfolio and Operational Scale:
As of March 31, 2025, the company is among the largest luxury hospitality operators in India, with a total of 3,553 keys spread across 13 operational hotels. Its portfolio includes:
- Owned Portfolio: 5 hotels directly owned by the company
- Managed Portfolio: 7 hotels managed under hotel management agreements
- Franchise Portfolio: 1 hotel owned and operated by a third party under a franchise arrangement
The brand’s offerings span across The Leela Palaces, The Leela Hotels, and The Leela Resorts. The company adopts an asset-light model through management contracts and franchising, enabling growth with limited capital deployment while enhancing income and brand presence.
Strategic Footprint:
The company maintains a strategic presence in 10 of India’s key business and leisure destinations, collectively accounting for 80% of international and 59% of domestic air traffic in FY25. As per the HVS Report (as of December 31, 2024), the company’s properties are located in all seven of India’s top business markets and three of the top five leisure destinations. Its portfolio represents approximately 18% of the total luxury keys in these key markets.
Expansion Plans:
To drive future growth, the company plans to add seven new hotels totaling approximately 678 keys, representing a 19.08% increase over current capacity. These additions are in various stages of development, acquisition, and finalization, and are expected to be operational by 2028.
Financial Performance:
The company has demonstrated robust financial performance, improving EBITDA from Rs.4,236.29 million in FY23 to Rs.7,001.68 million in FY25, with the EBITDA margin rising from 46.90% to 49.78% over the same period. It has achieved RevPAR and ARR growth at a CAGR of 11.8% and 10.8% respectively between FY19 and FY24, outperforming the broader luxury segment, which grew at 8.6% and 8.4%, respectively.
For FY24, the company delivered an industry-leading EBITDA margin of 48.92%, exceeding the margins of listed peers, which ranged between 33.66% and 45.60%.
Global Appeal:
The company attracts a diverse international clientele, with foreign guests accounting for 46.8% of room revenues in FY25. This global positioning aligns with broader trends, as luxury tourism worldwide is projected to grow at a CAGR of 6.6% from FY23 to FY28.
IPO and Valuation Outlook:
Proceeds from the IPO will be primarily used to reduce debt, with an estimated reduction in interest costs of approximately Rs. 328 crores. This saving is projected to enhance EPS by around Rs. 5 (net of tax), pushing the post-IPO EPS estimate to approximately Rs. 7.
Valuing the company on these fundamentals, the fair value is pegged at Rs. 470 per share post-listing, with potential to rise to Rs. 500 in the medium term.
Investment Recommendation:
Given its strong brand equity, scalable and asset-light business model, superior operational metrics, and high growth potential in the luxury hospitality segment, we strongly recommend this IPO as a long-term investment opportunity. The company is well-positioned to benefit from both domestic and global demand for luxury experiences, making it a compelling play in India’s premium hospitality sector.
+from Fundamental angle: Apply
+from grey market angle: Apply
The IPO opens on 26 May 2025 and closes on 28 May 2025.
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