Schloss Bangalore Ltd IPO Opens for Subscription: Here’s What Investors Should Know

Will Schloss Bangalore Limited IPO’s premium Leela-branded portfolio and strong growth outlook attract investor interest in the luxury hospitality space?

Schloss Bangalore Limited, one of India’s prominent luxury hospitality brands operating under “The Leela” name, has launched its IPO. With 13 hotels and a strong presence in premium destinations, does its owned-asset model and upscale positioning justify investor appetite in a competitive hospitality landscape?

About the Issue:  

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

Objectives of the Issue:

• Debt Reduction: Rs 2,300 crore will be used to repay, prepay, or redeem, in full or in part, outstanding borrowings of the company and its subsidiaries, including Schloss Chanakya, Schloss Chennai, Schloss Udaipur, and TPRPL.
   
• General Corporate Purposes: Rs 200 crore will be allocated towards general business requirements and to support future operational and strategic initiatives.

Promoter holding 

Project Ballet Bangalore Holdings (DIFC) Pvt Ltd, BSREP III Joy (Two) Holdings (DIFC) Limited, BSREP III Tadoba Holdings (DIFC) Pvt Ltd, Project Ballet Chennai Holdings (DIFC) Pvt Ltd, Project Ballet Gandhinagar Holdings (DIFC) Pvt Ltd, Project Ballet HMA Holdings (DIFC) Pvt Ltd and Project Ballet Udaipur Holdings (DIFC) Pvt Ltd are the company promoters. Pre-issue, they hold 100 of the company’s shares. Post-issue, their shareholding will decrease to 75.91.

Company Profile

Schloss Bangalore Limited, established in 2019, is a leading luxury hospitality company in India operating under "The Leela" brand. It owns, operates, and manages 13 hotels with 3,553 keys across premium locations. The company’s portfolio includes iconic properties like The Leela Palaces, Hotels, and Resorts. Its five owned hotels, located in Bengaluru, Chennai, New Delhi, Jaipur, and Udaipur, are celebrated for combining traditional Indian architecture with modern luxury.

Business Overview:

As of March 31, 2025, Schloss Bangalore Ltd is strategically located across 13 key business and leisure destinations, its footprint spans regions that accounted for 80 of international and 59 of domestic air traffic in FY25. The company holds nearly 18 of the total luxury hotel keys in these markets as of December 31, 2024, reinforcing its strong market presence in India’s premium hospitality sector.

In FY25, the company’s Owned Portfolio recorded an Average Room Rate (ARR) of Rs 22,545 and a Revenue per Available Room (RevPAR) of Rs 15,306, both 1.4 times higher than the industry average. Total Revenue per Available Room (TRevPAR) stood at Rs 29,575, also 1.4x the luxury segment benchmark. Between FY2019 and FY2024, Schloss’s Owned Portfolio delivered a robust 11.8 CAGR in RevPAR, outpacing the industry’s 8.6, while also offering room sizes approximately 36 larger than the overall luxury hospitality segment, reflecting the brand’s positioning in the high-end market

Financials 

In FY25, Schloss Bangalore Ltd recorded revenue from operations of Rs 1,300 crore, marking an 11.02 increase year-on-year. EBITDA rose by 16 to Rs 700 crore, resulting in a strong margin of 49.78. Despite this, the company posted a modest net profit of Rs 47.66 crore, with a slim net margin of 3.39. Adjusted net debt stood at Rs 2,568 crore, and employee benefit expenses remained a significant cost driver.

During the year, it reported an average room rate of Rs 16,408, with RevPAR at Rs 10,696 and TRevPAR at Rs 29,574. The properties achieved an average occupancy rate of 65.19, reflecting a stable position in the competitive luxury hospitality space.

A substantial share of the company’s revenue is generated from these five owned hotels. They contributed 93.46 of total income in FY25, 93.77 in FY24, and 91.13 in FY23

Listed Peer Comparison 

Figures in Rs  crore.
*P/E as per the upper band price
 

As of March 31, 2025, Schloss Bangalore Ltd had total borrowings of Rs 3,908.7 crore on a consolidated basis. The company plans to utilize Rs 2,300 crore from the IPO proceeds to repay a portion of this debt. This move is expected to lower debt servicing costs and strengthen the balance sheet. The company’s Debt Service Coverage Ratio stood at 0.63x in FY2025, and its Debt-to-Equity ratio was 1.08x—higher than the industry median of 0.48x, largely because most peers follow an asset-light model.

However, Leela Hotels operates with an asset-heavy model, owning several marquee properties across India which delivers 93 per cent of its total revenue. With the proposed debt reduction post-IPO, the company's leverage levels are expected to come closer to industry norms. This deleveraging, combined with its focus on optimizing the performance of existing high-end properties, positions Schloss Bangalore Ltd for more sustainable and profitable growth going forward.

As mentioned earlier, it operated 3,553 keys across its portfolio, placing it among the larger players in India’s luxury hospitality segment. In comparison, its listed peers had a wide range of key counts — from 2,036 keys for Ventive Hospitality Limited to 25,935 keys for The Indian Hotels Company Limited. Looking ahead, the company has a robust growth pipeline with plans to add 678 more keys across seven new hotels by FY2028.

Outlook

Schloss Bangalore Ltd is well-positioned to benefit from strong industry tailwinds, with international travelers contributing 46.8 per cent of its room revenues in FY2025 and Foreign Tourist Arrivals (FTAs) in India projected to grow at a CAGR of 16.8 per cent between 2024 and 2030. The company is also expected to tap into the expanding global luxury tourism market, forecasted to grow at 6.6 per cent CAGR through FY2028. With a robust development pipeline of around 678 keys across seven upcoming hotels by FY2028, Schloss is focused on strategic expansion while continuing to enhance performance of existing assets. Moreover, its emphasis on proactive asset management and same-store margin improvements positions it to benefit from the 10.9 per cent projected growth in luxury demand—outpacing the expected 6.1 per cent CAGR in supply—indicating favorable demand-supply dynamics and a promising growth outlook.

India currently has only 23 luxury hotel keys per million people, which is significantly lower compared to countries like Australia (973), Thailand (690), and China (177). This underpenetrated suggests a substantial growth opportunity for luxury hospitality players like Schloss Bangalore Ltd in the Indian market.

Conclusion
Company is set to benefit from strong industry tailwinds, including a rising influx of foreign tourists, increasing demand for luxury hospitality, and favorable demand-supply dynamics; the long-term outlook appears promising. However, the company’s above-industry leverage and premium valuation temper near-term attractiveness. Therefore, the IPO is recommended only for risk-taking investors with surplus capital, particularly if subscription levels remain moderate.