Leela Hotels IPO: Schloss Bangalore Limited IPO or Leela Hotels IPO opens on 26 May 2025 for subscription by investors. Here are 10 key risk from Red Herring Prospectus or RHP for investors to consider before subscribing to the Issue, Check details

Schloss Bangalore Ltd IPO or Leela Hotels IPO- 10 Key risks from RHP

1. As per the risks specified in the RHP, any deterioration in the quality or reputation of company’s “The Leela” brand could have an adverse effect on its business, financial condition and results of operation.

2.A significant portion of our total income is derived from the five hotels owned by Leela Hotels (aggregating to 93.46%, 93.77% and 91.13% of its total income for the Financial Year 2025, Financial Year 2024 and Financial Year 2023, respectively) and any adverse developments affecting such hotels or regions could have an adverse effect on its business, results of operations and financial condition.

3. Leela Hotels and certain of its Material Subsidiaries have incurred losses in the past during Financial Years 2024 and 2023 ₹( 21.27) million for the Financial Year 2024 and ₹(616.79 )million for the Financial Year 2023 (on a consolidated and restated basis)),as well as during Financial Year 2025 for three of our Material Subsidiaries, and may experience losses in the future which could result in an adverse effect on our business, cash flows and financial condition.

4. Leela Hotels and certain of its Material Subsidiaries have had negative net cash flows in the past and may continue to have negative cash flows in the future, which could adversely affect its results of operations and financial condition

5. The Hotel company has granted security interests over certain of its assets, and any failure to satisfy its obligations under its secured borrowings ( ₹ 39,087.46million as of Financial Year 2025) could lead to invocation of security interest, resulting in a forced sale or seizure of such assets.

6. Company and certain of its Material Subsidiaries have had negative net worth in the past ( ₹(28,257.23) million as at March 31, 2024, and ₹(25,119.63 )million as at March 31, 2023, on a consolidated and restated basis)and may experience negative net worth in the future which could result in an adverse effect on its business, cash flows, financial condition and results of operations.

7. It has substantial indebtedness which requires significant cash flows to service and limits its ability to operate freely. As of March 31, 2025, it had outstanding borrowings of ₹39,087.46 million on a restated and consolidated basis. Further, its finance costs as a percentage of total income for the Financial Year 2025 amounted to 32.57%. In addition, It may require additional financing in the future in order to continue to grow its business, which may not be available on acceptable terms, or at all

8. The company is exposed to risks associated with the renovation and refurbishment of existing hotels. Delays in the renovation and refurbishment of existing hotels in its Portfolio may have an adverse effect on its business, financial condition and results of operations.

9. The company is exposed to risks associated with the construction of new hotels, including The Leela Ayodhya, The Leela Palace Agra, The Leela Ranthambore, The Leela Palace Srinagar and The Leela Bandhavgarh. Delays in the construction of new hotels may have an adverse effect on its business, financial condition and results of operations.

10. The determination of the Price Band is based on various factors and assumptions and the Offer Price of the Equity Shares, market capitalization and price to earnings ratio based on the Offer Price of the Equity Shares, may not be indicative of the market price of the Company on listing or thereafter and, as a result, investors may lose a significant part or all of their investment.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.