Grand Continent Hotels Ltd. (GCHL) operates in the mid-scale hotel sector, catering to India’s growing middle-class and business travelers. The company’s focus is on delivering differentiated yet comfortable service with a value-for-money proposition. As of September 30, 2024, GCHL, along with its joint venture (JV) partners, operates 16 hotel properties with a total of 753 keys across Karnataka, Tamil Nadu (NSE:TNNP), Goa, Andhra Pradesh, and Telangana.
Strategic Positioning and Growth Plans
GCHL’s strong presence in Bengaluru, a key business hub, gives it a strategic advantage. With 10 hotels in Bengaluru contributing 60.39% to its revenue, the company is well-positioned to tap into corporate and business travelers.
The company follows an asset-light model, primarily operating leased properties, with two owned hotels in Bengaluru. It has established franchise agreements with Sarovar Hotels and Royal Orchid (NSE:ORCD) Associated Hotels, leveraging their brand value and sales network.
Looking ahead, GCHL plans to expand aggressively, targeting a portfolio of over 2,000 keys by FY26 through new property acquisitions and development. As of February 28, 2025, GCHL has 20 operational hotels with 900 keys and has mobilized additional hotels set to open soon.
IPO Details
GCHL is launching its IPO to raise INR 74.46 crore, with a price band of INR 107 – INR 113 per share. The issue structure is as follows:
- Fresh Equity Shares: 6,260,400 shares (INR 70.74 crore)
- Offer for Sale (OFS): 328,800 shares (INR 3.74 crore)
- Total Issue Size: 6,589,200 shares
- IPO Opens: March 20, 2025
- IPO Closes: March 24, 2025
- Minimum Lot Size: 1,200 shares
- Listing: NSE SME Emerge
Post-IPO, the company’s paid-up capital will rise from INR 18.66 crore to INR 24.92 crore, with a market cap of INR 281.59 crore at the upper price band.
Financial Performance
GCHL has demonstrated strong revenue growth in recent years:
- FY22: Revenue INR 6.03 crore | Net Loss INR (0.79) crore
- FY23: Revenue INR 17.05 crore | Net Profit INR 1.05 crore
- FY24: Revenue INR 31.53 crore | Net Profit INR 4.12 crore
- H1 FY25: Revenue INR 31.86 crore | Net Profit INR 6.81 crore
The company's PAT margin has improved significantly, reaching 19.53% in H1 FY25. Additionally, post-IPO, the company will be debt-free, further boosting profitability.
Valuation and Peer Comparison
At the upper price band, the IPO is priced at a P/E ratio of 20.66 (FY25E) and 68 (FY24). Comparatively, listed peers such as Lemon Tree (NSE:LEMO) (P/E: 57), Sayaji Hotels (P/E: 33), and Royal Orchid (P/E: 22) trade at varied valuations. While GCHL is a smaller player, its growth prospects and improving financials make it a compelling mid-scale hospitality stock.
GCHL is poised for significant growth in India’s mid-scale hospitality segment. While the IPO appears fairly priced, the company’s strong fundamentals, aggressive expansion, and improving profitability make it an interesting bet for long-term investors. Given the hospitality sector's revival and investor interest, the IPO could see healthy demand. Investors with a medium to long-term horizon may consider subscribing to the issue.
Read More: Bharat Bargains: The AI-Powered Strategy That Delivered 1,086.5% Returns!
X (formerly, Twitter) - Aayush Khanna
LinkedIn - Aayush Khanna