Schloss Bangalore IPO: Worth Checking In?

Schloss Bangalore Ltd, the prominent luxury hotel operator behind the brand “The Leela,” launched its initial public offering (IPO) on May 26, 2025, with bidding closing on May 28, 2025. Ahead of the opening, the grey market premium (GMP) rose to Rs 15, indicating a 3% premium.

Investors are advised to carefully consider both the opportunities and risks before subscribing. For a detailed review, see our comprehensive IPO analysis here.

Schloss Bangalore IPO Details 

• Issue Details: Mainstream
• Issue Size: Rs 3,500 crore
• Fresh Issue: Rs 2,500 crore
• Offer for Sale: Rs 1,000 crore
• Price Band: Rs 413 – Rs 435
• Lot Size: 34 shares
• Listing Date: June 2, 2025

Overview of Schloss Bangalore Ltd

Schloss Bangalore Ltd is a leading luxury hospitality company in India, operating under the iconic "The Leela" brand. It specializes in owning, operating, managing and developing premium hotels and resorts.

As of March 31, 2025, “The Leela” is one of the largest luxury hospitality players in India by room count, with a portfolio of 13 operational properties totalling 3,553 keys. This includes The Leela Palaces, The Leela Hotels and The Leela Resorts, operated through a combination of direct ownership and management agreements with third-party owners.

The company has a robust expansion pipeline, with 7 new properties—adding approximately 678 keys—planned through 2028. These additions, currently in various stages of acquisition and development, will be a mix of company-owned and managed assets.

Schloss Bangalore Key Strengths

• Global Recognition: “The Leela” brand has achieved strong international acclaim, ranking #1 among the world’s best hotel brands in 2020 and 2021 and consistently placed among the top three in 2023 and 2024, according to Travel + Leisure World’s Best Awards. This highlights the brand’s global appeal and trust.
• Market Leadership: In FY25, the company’s Revenue per Available Room (RevPAR) across its Owned Portfolio was 1.4 times higher than the average for India’s luxury hotel segment. For its Managed Portfolio, the Average Room Rate (ARR) and RevPAR outperformed comparable hotels in their respective micro-markets by 1.3 times and 1.2 times, respectively.
• Strategic Presence: As of December 31, 2024, the company’s portfolio spans all 7 major business markets and 3 of the top 5 leisure destinations in India, accounting for ~18% of the total luxury hotel keys in these regions.
• Robust Financial Turnaround: FY25 marked a major financial upswing, with net profit rising to Rs 47.65 crore from a loss of Rs 2.12 crore in FY24. Revenue grew by 11% while EBITDA increased by 17% year-over-year.
• Industry-Leading Margins: The company recorded an EBITDA margin of 48.92% in FY25—surpassing listed peers, whose margins ranged between 33.66% and 45.60%.
• Asset Enhancement Initiatives: Through targeted investments in refurbishment, upgrades and repurposing underutilized spaces, the company has significantly boosted portfolio performance. These efforts led to a more than twofold increase in Average Room Rent, rising from Rs 11,928 in FY20 to Rs 28,756 in FY25 and a RevPAR improvement from Rs 7,037 to Rs 15,242 over the same period.

Schloss Bangalore Risk Factors

• Recent History of Losses: The company reported net losses of Rs 61.68 crore in FY23 and Rs 2.13 crore in FY24. Although FY25 marked a turnaround, the possibility of incurring future losses remains, which could impact its overall financial health and investor confidence.
• Negative Net Worth: The company and certain key subsidiaries have reported negative net worth in the past — Rs (2,825.72) crore as of FY24 and Rs (2,511.96) crore as of FY23. Continued or future negative net worth could adversely affect business operations, liquidity, and financial results.
• High Leverage: Operating in a capital-intensive sector, the company’s growth and operations require significant funding. As of March 31, 2025, it had outstanding consolidated borrowings of Rs 3,908.7 crore, which may constrain future financial flexibility and increase exposure to interest rate fluctuations.
• Encumbrance of Promoter Shareholding: Promoter shareholding in the company and certain subsidiaries has been pledged in favour of lenders. Any default under these financing agreements could result in lenders exercising their rights, potentially disrupting operations or leading to a change in control.
• Significant Contingent Liabilities: As of March 31, 2025, the company reported contingent liabilities of Rs 494.1 crore, which, if materialized, could adversely affect its financial position.

Final Thoughts: Should You Subscribe to Schloss Bangalore IPO?

Schloss Bangalore Ltd is well positioned in India’s luxury hospitality sector, which is expected to grow at a faster pace. Additionally, the company plans to use IPO proceeds to repay ~59% of its Rs 3,908.75 crore debt (as of 31 March 2025), which should significantly reduce interest costs and boost profitability.

In terms of valuation, the IPO appears aggressively priced. At the upper band of Rs 435, it commands a P/E of 221 times FY25 EPS, valuing it at a substantial premium over more profitable peers like Indian Hotels and EIH. Therefore, material listing gains for IPO investors are unlikely.

However, the company’s growth potential and asset-light business model remain promising. It commands the highest average room rates and RevPAR due to its pure luxury positioning.

Considering these factors, long-term investors seeking pure luxury hotel exposure may consider buying the stock in the secondary market post-listing, once the price stabilizes.

For a deep dive into other IPOs, explore: IPO Corner on Liquide