Saj Hotels IPO Lists at ₹55 Below Issue Price

Saj Hotels Limited, a company operating in the hospitality industry, made a disappointing debut on the Indian stock market on Monday, 7th October 2024, with its shares listing at a significant discount to the issue price on the National Stock Exchange (NSE) SME platform.

Listing Details

• Listing Price: Saj Hotels shares were listed at ₹55 per share on the NSE SME platform, marking a weak start to its journey as a publicly traded company.
• Comparison to Issue Price: The listing price represents a substantial discount to the IPO issue price. Saj Hotels had set its IPO price at ₹65 per share.
• Percentage Change: The listing price of ₹55 on the NSE SME translates to a discount of 15.38% below the issue price of ₹65.

First-Day Trading Performance

• Opening vs. Latest Price: Following its weak opening, Saj Hotels' share price experienced some volatility. By 10:08 AM, the stock was trading at ₹56, up 1.82% from its opening price but still 13.85% below the issue price.
• Market Capitalisation: As of 10:08 AM, the company's market capitalisation stood at ₹92.32 crore.
• Trading Volume: The traded volume was 4.34 lakh shares with a traded value of ₹2.42 crore, indicating moderate investor interest on the first day of listing.

Market Sentiment and Analysis

• Market Reaction: The market reacted negatively to Saj Hotels' listing. The significant discount to the issue price indicates weak demand and investor caution regarding the company's prospects.
• Subscription Rate: The IPO was moderately oversubscribed by 5.46 times, with retail investors leading at 8.65 times subscription and NIIs at 2.12 times. Notably, there was no participation from QIBs.
• Grey Market Premium: Prior to listing, shares were trading without a premium in the grey market, which was reflected in the weak listing.

Growth Drivers and Challenges

Expected drivers of future performance:

• Diverse range of hospitality services including resorts and villa rentals
• Scenic locations offering natural beauty and views
• Versatile event hosting capabilities for conferences and weddings
• Investment in My Own Rooms Dot In Private Limited for portfolio diversification

Potential challenges:

• Highly competitive hospitality sector
• Seasonal fluctuations in demand
• Recent setback in financial performance due to heavy rains and expansion-related costs

Utilisation of IPO Proceeds

Saj Hotels plans to use the funds for:

• Capital expenditure for expansion of existing resort properties
• Funding working capital requirements
• General corporate expenses

Financial Performance

The company has demonstrated exceptional financial growth:

• Revenue increased by 13.52% to ₹1,455.49 lakh in FY2024 from ₹1,282.19 lakh in FY2023
• Profit After Tax (PAT) decreased by 3.11% to ₹344.68 lakh in FY2024 from ₹355.76 lakh in FY2023

As Saj Hotels begins its journey as a listed entity, market participants will closely monitor its ability to leverage its diverse hospitality offerings and execute its expansion plans to drive future growth and improve shareholder value. The weak listing and muted subscription rates suggest cautious market sentiment towards the company's prospects in the competitive hospitality sector. Investors will be watching for signs of improved financial performance and successful implementation of the company's growth strategies.