Business of Royal Orchids Hotels Ltd.
Royal Orchid hotels operate a total of four hotels three in Bangalore and 1
in Mysore. The four hotels put together have a total of 435 rooms and 12 banquet
halls and the company had a turnover of Rs.576.33 million in the last fiscal
of which 75% came from room rents and 22% came from the sale of food and beverages.
The majority of the revenues came from the three hotels in Bangalore with the
hotel in Mysore only contributing 12.8% of the total revenues.
The primary segments of customers are business travelers, which include the
senior, middle and junior management of various companies, and additionally
airline crew is also another important category of customers.
Financials
The company has seen a good growth in its revenues in the last few years, and
the turnover has grown from Rs.56.48 million in 2002 to Rs.581.82 million in
the last fiscal. The profits have also grown in a healthy fashion and stand
at Rs. 129.87 million in the last fiscal. The company had a loss of Rs.1.37
million in the year 2001 and then a loss of Rs. 18.67 in the next year but for
the next three years made good profits and this year also the trend so far has
been good. The EPS
comes out to Rs.7.10 in the previous fiscal.
Purpose of the IPO
Royal Orchid intends to raise money from the IPO
to for further expansion as well as modernization of its current hotels. The
company intends to expand into Hyderabad and Pune and operate one hotel each
in both of these locations. While the hotel in Hyderabad will start off with
72 rooms the hotel in Pune will start off with 100 rooms.
In addition to that it also wants to expand and renovate its existing properties
in Bangalore and buy a stake of 51% in Maruti Comforts and Inn Private Ltd.
Conclusion
Royal Orchid has decided its IPO price between Rs.150 – Rs.165 and the
issue is open from the 12 January to 18th January. Although the issue is not
priced cheaply the company is in a growing industry and itself is in a growth
phase. Its fortunes depend on the IT industry as the cities that it has chosen
are IT hubs and this sector is also expected to do well in the coming years
and therefore investors can look at investing in this issue.
The following table shows the upcoming IPO that have been covered under this
section and their status. You can click on any of these to read more about them.
