In today’s Finshots, we take a look at the Brigade Hotel Ventures IPO, which opens today and closes subscription on July 28th, 2025 (Monday).

The Story

It’s Friday evening. You’ve wrapped up another long work week and you’re finally logging off, but not just from anywhere. You work out of the iconic World Trade Center, right in the heart of India’s Silicon Valley.

And this isn’t just any weekend. You’ve landed a promotion, and that calls for a proper celebration.

As you step out of the office and glance across the lake, there it is — Orion Mall, one of the largest shopping destinations in Asia, sprawling across 9 lakh lakh square feet.

You grab a couple of gifts from the mall — something nice for the family, and then make your way to the Sheraton Grand Hotel just next door to celebrate at dinner.

Now here’s something all these properties have in common. They’re all operated by the Brigade Group, one of the leading real estate and infrastructure development companies in the city. And if you’ve ever travelled or lived in Bengaluru, chances are you’ve spotted the Brigade name across towering office towers, malls or apartments with their own mini-world inside.

They’ve become a familiar name in the city’s skyline because Brigade isn’t just any real estate company. It’s one of the big players and a ₹26,500 crore listed company, officially known as Brigade Enterprises.

Back in 2016, it carved out its hotel business into a separate entity — Brigade Hotel Ventures Ltd (BHVL), to manage things more efficiently and give its hospitality arm a sharper focus.

And now this arm wants to go public.

It wants to raise ₹759 crores, out of which ₹468 crores or slightly over 60% will go towards debt repayment. Most of this debt piled up while keeping their hotels up and running, covering day-to-day expenses and working capital needs.

The next chunk, about ₹107 crores, is set aside for expansion plans. This includes five new properties on the cards across South India — a luxury beach resort in Chennai, two mid-scale hotels in Bengaluru, a luxury hotel in Hyderabad and a luxury resort in Vaikom, Kerala.

Now, here’s an interesting bit. For the Kerala project, they’re planning to buy about 7 acres of land. But that land is already owned by the parent company, Brigade Enterprises (BEL), through its subsidiary, BHVL. In other words, the IPO money will partly be used to buy assets that are already in the promoter group’s kitty.

And whatever’s left will go towards other growth opportunities and general corporate purposes.

Besides, there’s also something else you should know. The IPO was originally pegged at ₹900 crores. But before the public issue, 360 One Asset Management stepped in with a ₹126 crore pre-IPO investment at around ₹90 per share. And this meant that BHVL trimmed down the size of the offering.

Which brings us to the big question — what’s in this IPO for you, and is it worth checking into?

To understand that, let’s take a quick look at India’s hotel industry. It’s in the middle of a quiet boom. Between business trips, destination weddings, religious pilgrimages and family holidays, hotel rooms are filling up fast. Demand is growing at 5.6% every year. For context, a decade ago, we needed around 61,000 rooms a day. By 2025, that hit 1.2 lakh!

But the problem is that we’re not adding enough rooms to keep up. And that’s exactly the gap BHVL wants to help fill.

Building hotels isn’t cheap though. Whether midscale or luxury, it’s a capital-heavy business, especially in big cities where land and labour don’t come easy. BHVL knows this well. Most of its hotels are geared towards business travellers, sitting right beside tech parks and commercial hubs. A night at the Sheraton Grand in Bengaluru, for instance, starts at ₹15,000.

That focus makes sense when you consider where the demand’s coming from. Tier-1 cities like Delhi-NCR, Mumbai, Bengaluru, Chennai and Hyderabad dominate the market. And with 1,604 rooms, BHVL is already the second largest hotel operator among private players in South India.

The numbers show how far they’ve come. In FY23, BHVL posted ₹356 crores in revenue with a ₹3 crore loss. By FY25, revenue jumped to ₹470 crores, and profits touched ₹23 crores. Margins are still thin, but it’s a clear turnaround.

Now zoom in a bit more and you’ll see how their hotels are performing. In Bengaluru, their biggest market, BHVL clocked an Average Daily Rate (ADR) (or the average price it charges for a room per night) of around ₹8,300 in FY25. That’s nearly 20% higher than the city’s overall average. And with an impressive occupancy rate of 76%, they’ve comfortably outperformed the industry’s 64%. Their Revenue per Available Room (RevPAR) rose to ₹5,138 in FY25. And they sold their highest number of room nights yet.

But they’re not done. BHVL has five more hotel projects lined up, with the last expected by FY29. Once all are operational, total room count should rise from 1,604 to 2,560, which of course is a major capacity boost.

So, to be fair, BHVL does have a few things going for it. 

But no investment story is complete without a peek into the fine print. So let’s talk about the risks.

For starters, a big chunk of the IPO money — something we mentioned earlier too, is being set aside for debt repayment. On the face of it, that sounds like a smart move. Less debt means a cleaner balance sheet and a bit more breathing space.

But the problem here is that BHVL’s debt to equity ratio is a staggering 7.4. That’s way above the typical comfort level of around 2. That ratio basically tells you how much of a company’s operations are funded through borrowing versus its own money. And while the plan is to bring that number down to below 1 using part of the IPO funds, it also means most of the money isn’t really going into growing the business.

And once that debt’s out of the way, the company still has to keep a close eye on its working capital, especially with all the big-ticket expansions coming up. Managing that won’t be easy, and it’ll come with its own financial pressures.

Also, while they’re looking to grow across cities, the business still leans heavily on one — Bengaluru. Despite having nine properties spread across Mysore, Chennai, Kochi and even GIFT City in Gujarat, more than 62% of BHVL’s revenue flows in from Bengaluru alone. In fact, just three hotels — Sheraton Grand Bengaluru, Holiday Inn Chennai and Holiday Inn Bengaluru, rake in that entire chunk.

Despite that, they’re now adding two more hotels in Bengaluru. That kind of concentration is risky. If anything hits demand in the city — be it a local economic slowdown or regulatory hurdles — it could directly dent BHVL’s performance. It’s like building a portfolio and then putting most of your money into a single stock.

Then there’s the people problem. The company’s attrition rate spiked to 58% in FY25, up from 48% the year before. That’s steep. And it’s not great for a business that runs on service quality. BHVL blames the churn on more jobs opening up across the hospitality industry. And maybe that’s true. But with five new projects coming up, they’ll need more hands on deck, not fewer. Holding on to talent will be critical.

But perhaps the most eyebrow-raising bit is this. Part of the IPO money is going toward buying land from the company’s own promoters. Yup. The parent company, BEL, already owns this land through a subsidiary. So essentially, investor money is being used to purchase promoter-owned assets. That’s the kind of related-party transaction that often triggers governance concerns. Now, to be fair, the land will be used to develop new hotels. If executed well, this could actually create value in the long run. But still, it’s one of those moves that deserves a closer look.

And the company’s future value is tied closely to those five upcoming hotel projects. That’s where the returns could come from.

But they’re not alone in the race. BHVL is up against some serious heavyweights like Indian Hotels, ITC Hotels, and EIH — all far more established players. Yet, BHVL is asking investors to pay a hefty premium. Its P/E ratio (Price to Earnings) or how much investors are willing to pay for each rupee of a company’s earnings, stands at 125x. Compare that to Indian Hotels at 64x, ITC Hotels at 84x, or EIH at just 31x. For every rupee BHVL earns, investors are shelling out way more than they would for the competition.

So yeah, the company’s doing a lot of things right. But those new hotels won’t show up overnight. It’ll take years before they’re up and running.

And until then, that value remains locked in, waiting for the promise of future growth to turn real.

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