Brigade Hotel Ventures IPO: Premium Property, Premium Price: Is It Worth It?

About the Issue:  

Brigade Hotel Ventures Ltd is preparing to launch its Initial Public Offering (IPO) for equity shares. See the issue details below.

Objects of the Issue  

The Brigade Hotel Ventures IPO proposes to use the net proceeds for three main objectives: repaying/prepaying certain outstanding borrowings of the company and its material subsidiary, SRP Prosperity Hotel Ventures Limited; paying for the purchase of undivided land shares from the Promoter, BEL; and pursuing inorganic growth through unidentified acquisitions, other strategic initiatives, and general corporate purposes 

Promoter holding 

brigade Enterprises Ltd is the promoter of Brigade Hotel Ventures Limited, holding a significant stake in the company. Prior to the issue, it held 95.26per cent of the total shareholding.
post-issue, its stake will be reduced to 74.09per cent, aligning with regulatory requirements.

Company Profile  

Brigade Hotel Ventures Limited (BHVL) is a hotel owner and developer focused mainly on key cities in South India. As of the Red Herring Prospectus date, the company operates nine hotels with a total of 1,604 rooms ("keys"). These hotels are managed by well-known international hospitality brands like Marriott, Accor, and InterContinental Hotels Group, and cater to different customer segments—ranging from midscale to upper-upscale.

The hotels offer a full range of guest amenities, including fine dining restaurants, meeting and event spaces, lounges, swimming pools, spas, and gyms.

BHVL was incorporated on August 24, 2016, in Bengaluru, Karnataka, as a public limited company. It is promoted by Brigade Enterprises Limited (BEL), a leading real estate developer in India. This connection helps BHVL by giving it access to BEL’s strong brand, development experience, and business network, improving its efficiency and ability to deliver projects on time.

Financials 

Brigade Hotel Ventures Limited has demonstrated consistent growth in recent years. Revenue increased from Rs 356.41 crore in FY23 to Rs 404.85 crore in FY24 and further to Rs 470.68 crore in FY25, reflecting a healthy CAGR of around 14.9per cent. The company turned profitable in FY24 with a PAT of Rs 31.14 crore, following a loss of Rs 3.09 crore in FY23, though PAT slightly declined to Rs 23.66 crore in FY25. EBITDA grew steadily from Rs 113.98 crore in FY23 to Rs 166.87 crore in FY25, indicating improved operational efficiency. Net worth more than doubled over two years, rising from Rs 33.81 crore in FY23 to Rs 78.58 crore in FY25, while borrowings remained high but stable, reflecting the capital-intensive nature of the hospitality sector.

Valuation & Returns 

Brigade Hotel Ventures Ltd. (BHVL) is entering the market at a steep valuation. Its Price-to-Earnings (P/E) ratio of 163 and Price-to-Book (P/B) of 21.3 are the highest among listed hotel companies, reflecting strong investor expectations for future growth. However, such high multiples also indicate that the stock is expensive when compared to its current earnings and book value. On the performance front, BHVL reports a healthy Return on Equity (ROE) of 15.31 per cent, which, while solid, is slightly below peers like Lemon Tree (18.45 per cent) and Indian Hotels (16.12 per cent). A notable positive is BHVL’s EV/EBITDA ratio of 10.15 — the lowest among peers — which may suggest efficient operations or relatively lower debt levels. Overall, BHVL stands out for its premium hotel portfolio backed by global brands and a strong parent group. However, the sky-high valuation could be a concern unless the company delivers robust earnings growth ahead.

Outlook

Brigade Hotel Ventures Limited (BHVL) is a hospitality company focused on owning and developing hotels across South India. It currently operates nine hotels with 1,604 keys in key cities such as Bengaluru, Chennai, and Kochi. These properties span upper upscale to mid-scale segments and are managed under global brands like Marriott, Accor, and IHG.

As a wholly-owned subsidiary of Brigade Enterprises Limited (BEL), a leading real estate developer, BHVL benefits from its parent’s strong brand, project execution capabilities, and access to land. Its hotels are strategically located near IT parks, business hubs, and tourist destinations, ensuring steady demand. A seasoned management team supports its operational efficiency and growth.

BHVL aims to expand its portfolio by developing five new hotels and exploring inorganic growth opportunities. The company is also shifting toward an asset-light model, focusing on management and franchise contracts to scale efficiently and improve ROCE.

India’s hospitality sector is poised for growth, with the World Travel & Tourism Council projecting a CAGR of 7.6per cent, reaching Rs 3.7 lakh crore by 2034. BHVL’s upcoming IPO of Rs 900 crore will fund debt repayment, land acquisitions, expansion plans, and general corporate purposes, strengthening its financial position for future growth.

Considering the issue details and the elevated valuation, we recommend avoiding the subscription to this IPO.