Hyatt-owner Juniper Hotels makes flat debut; stock surges 10% post listing

Shares of Hyatt-owner Juniper Hotels made a flat debut on the stock exchanges on Wednesday, in sync with subdued broader market. Shares of luxury hotel development and ownership company listed at ₹365 on the NSE, up 1.4% against the IPO price of ₹360 apiece. On the BSE, the stock opened at ₹361.2, marginally higher than the issue price.

Post listing, Juniper Hotels shares gained as much as 10.5% to hit a high of ₹397.7 on the NSE and ₹397.3 on the BSE, while the market capitalisation rose to ₹8,690 crore.

The listing of Juniper Hotel was in line with Street expectations as the stock was commanding zero premium in the grey market, indicating flat listing on the bourses.  

“This performance aligns with pre-listing expectations, which were tempered by muted investor enthusiasm and a lack of significant gray market premium (GMP),” says Shivani Nyati, Head of Wealth at Swastika Investmart Ltd.

“The saturated hospitality sector raises concerns about Juniper's ability to maintain its market share amidst fierce competition. While Juniper boasts a well-established presence, its recent financial performance has not been particularly strong, potentially deterring investors. Thus, considering all these factors, a cautious approach is crucial for investors,” Nyati says.

Despite lower subscription demand in the bidding process, Juniper Hotels listed above everyone’s expectations which can be attributed to brand “Hyatt” which is a well-known global brand and too big to ignore, says Prashanth Tapse, Senior VP Research, Mehta Equities.

“Considering the sector demand and focus on India tourism along with the primary objective of reducing the debt, which could lighten the interest burden and can improve the bottom line in the coming years. With its established brand and strategically located assets, the company is well-positioned to capitalise on emerging hospitality trends. The hotel sector is expected to outperform in the coming years. Hence allotted investors can hold and add more at lower levels which can reward them in the medium to long term,” adds Tapse.

The ₹1,800 crore IPO of Juniper Hotel, which was offered at a price band of ₹342-360 per share, was subscribed 2.18 times as it received lukewarm response from net worth individuals. The portion set aside for the non-institutional investors (NII) was booked 0.89 times, while quota for qualified institutional buyers (QIBs) was subscribed 3.11 times. The retail segment portion received 1.31 times bids. The company had reserved half of the issue for QIB, up to 15% for NII, and the remaining 35% for retail investors.

The issue, which opened between February 21-23, was booked 0.12 times on day 1, followed by 0.24 times on day 2, and 2.18 times on final day. The lot size of the IPO was 40 equity shares and in multiples thereof.

Juniper Hotels IPO was completely a fresh issue of equity shares, and there is no OFS component. The company plans to utilise ₹1,500 crore for repayment, in full or in part, of certain outstanding borrowings availed by the company and its recent acquisitions, namely Chartered Hotels Private Limited and Chartered Hampi Hotels Private Limited. A part of the fund will be used to meet general corporate purposes.

A day prior to the opening of the issue, Juniper Hotels raised ₹810 crore from anchor investors. Foreign and domestic institutions who participated in the anchor book were Fidelity, Kotak Mahindra MF, Government Pension Fund (Norges), White Oak, Schroder, The Prudential Assurance Company (MNG), Invesco, ICICI Prudential Life Insurance, HDFC Life Insurance and Quant Mutual Fund.

Juniper Hotels is promoted by Saraf Hotels and its affiliate, Juniper Investments and Two Seas Holdings, an indirect subsidiary of a global hospitality company, Hyatt Hotels Corporation. The company owns and manages a portfolio consisting of seven hotels and serviced apartments and operates a total of 1,836 keys of "Hyatt" affiliated hotel keys in India as of September 30, 2023. Its hotels and serviced apartments are classified under three distinct segments luxury – the Grand Hyatt Mumbai Hotel and Residences and Andaz Delhi; upper upscale – the Hyatt Delhi Residences, Hyatt Regency Ahmedabad, Hyatt Regency Lucknow, and Hyatt Raipur; and upscale – Hyatt Place Hampi.