The Indian hotel and tourism sector is on the cusp of a significant transformation, and Schloss Bangalore Limited, the proud operator of “The Leela” brand, has emerged as a central protagonist. Backed by global asset management powerhouse Brookfield, Schloss Bangalore has launched a ₹3,500 crore IPO, poised to capitalize on the growing appetite for luxury hospitality in India.
Here’s a deep-dive into the IPO details, financials, business strategy, and long-term prospects of Schloss Bangalore Limited.
Company Background and Transformation Journey
Originally incorporated as “Schloss Bangalore Pvt. Ltd.” on March 20, 2019, in New Delhi, the company transitioned to a public limited entity and was renamed “Schloss Bangalore Limited” on May 30, 2024. The transformation mirrors the revival and upscale repositioning of the Leela brand, a name synonymous with luxury, elegance, and Indian heritage since its founding by Captain C.P. Krishnan Nair in 1986.
As of March 31, 2025, Schloss Bangalore manages 3,553 keys across 13 operational hotels, making it one of the largest luxury hospitality players in India. The company owns five of these properties, manages seven under long-term agreements, and operates one through a franchise model.
IPO Snapshot: Key Details
| Particulars | Details |
|---|---|
| IPO Issue Size | ₹3,500 crore |
| Fresh Issue | ₹2,500 crore |
| Offer for Sale (OFS) | ₹1,000 crore |
| Price Band | ₹413 – ₹435 |
| Post-Issue Market Cap | ₹14,527 crore |
| P/E Ratio (FY25) | 302.6x |
| IPO Dates | May 26 – May 28, 2025 |
| Lot Size | 34 shares |
| Promoter Holding Post-IPO | 75.9% |
Use of Proceeds
The net proceeds from the fresh issue will be deployed as follows:
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₹1,102.5 crore – Repayment of company-level borrowings
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₹1,197.5 crore – Debt repayment for subsidiaries including Schloss Chennai, Udaipur, Chanakya, and Tulsi Palace Resort
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Balance for general corporate purposes
This debt reduction strategy is expected to significantly strengthen the balance sheet and improve cash flows.
Financial Performance: Improving Fundamentals
Revenue and Profitability (₹ crore):
| Particulars | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue from Ops | 860 | 1,171 | 1,301 |
| EBITDA | 380 | 546 | 576 |
| Net Profit | -62 | -2 | 48 |
| EBITDA Margin | 44.2% (FY25) | ||
| PAT Margin | 3.7% (FY25) |
Despite a historically high debt load and ongoing investments, the company has moved into profitability in FY25, reflecting operational leverage and increased occupancy.
Strategic Growth and Expansion
1. Asset-Light Model
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7 of 13 hotels are managed, not owned
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1 is operated under a franchise agreement
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54.4% of total keys are under third-party ownership
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₹60.7 crore in management fees (FY25)
2. Capex-Driven Quality Enhancement
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Total Capex since April 2021: ₹654.6 crore
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Signature renovations like The Leela Palace Jaipur drove ARR from ₹11,928 to ₹28,756
3. Premium Experience
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72 F&B venues including Jamavar, Megu, and Sheesh Mahal
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13 wellness centers and spa partnerships (including with Soneva)
Hotel Portfolio Overview (as of Mar 2025)
Owned Hotels (5):
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The Leela Palace Bengaluru, Chennai, New Delhi, Jaipur, and Udaipur
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Combined 1,224 keys
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ARR ranges from ₹12,725 to ₹47,138
Managed Hotels (7):
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Includes properties in Delhi, Gurugram, Gandhinagar, Bengaluru, Hyderabad, and Kerala
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Key count: 1,931
Franchise Hotel (1):
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The Leela Mumbai: 398 keys
Overall average occupancy stands at 65%, with ARR at ₹16,409 and RevPAR at ₹10,696
Sector Outlook: Bullish Long-Term Prospects
India’s luxury hospitality market is on a growth trajectory:
| Metric | FY24 | FY28E | CAGR |
|---|---|---|---|
| Domestic Tourist Visits (cr) | 280 | 600 | 13.4% |
| Foreign Tourist Arrivals (cr) | 1.0 | 1.5 | 7.1% |
| Luxury Hotel Demand | – | – | 10.6% |
| Luxury Hotel Supply | – | – | 5.9% |
Key Drivers:
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₹1.7 trillion infrastructure push
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Demand-supply gap: 190 bps
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Surge in destination weddings (hotels get ~50% of spend)
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Low penetration of organized luxury hotels (~29,000 branded keys only)
Competitive Positioning
| Company | Revenue (₹cr) | EBITDA Margin | PAT Margin | P/E |
|---|---|---|---|---|
| IHCL (Taj) | 8,334 | 33.2% | 23.5% | 57.4x |
| EIH (Oberoi) | 2,743 | 37.1% | 25.9% | 31.6x |
| Chalet Hotels | 1,718 | 42.8% | 8.3% | 136.7x |
| Schloss Bangalore | 1,301 | 44.2% | 3.7% | 302.6x |
Despite the highest P/E, Schloss offers superior EBITDA margins and has the most upscale brand image, which investors may be willing to pay a premium for.
Future Projects and Expansion Plan
| Property | Type | Keys | Capex (₹cr) | Start Year |
|---|---|---|---|---|
| The Leela Palace Agra | Palace | 99 | 442 | 2028 |
| The Leela Palace Srinagar | Hill Station | 170 | 190 | 2028 |
| The Leela Ayodhya | Spiritual | 100 | 300 | 2028 |
| The Leela Ranthambore | Heritage | 76 | 128 | 2028 |
| The Leela Bandhavgarh | Wildlife | 30 | 72 | 2028 |
| Sikkim, Mumbai Residences | Mixed | ~200 | TBD | 2026 |
Expansion will continue to be funded by Brookfield-affiliated capital and internal cash flows, enabling rapid scaling while retaining control.
Risks to Watch
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High revenue dependence (90%) on 5 owned hotels
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Conflicts of interest may arise from Brookfield’s diversified hospitality investments
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High debt burden, though reducing post-IPO
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Luxury demand is cyclical, vulnerable to global tourism trends
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Competition from digital aggregators and boutique stays
Leadership and Governance
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Chairman: Deepak Parekh (former HDFC Chairman)
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CFO: Ravi Shankar (ex-Starwood, Meraas)
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Brookfield Lead: Ankur Gupta (Managing Partner, Asia-Pacific)
Strong governance and institutional backing is a core investor confidence booster.
IPO Verdict: Should You Subscribe?
Why You Might Subscribe:
✅ Access to India’s most iconic luxury hospitality brand
✅ Strong management and Brookfield support
✅ Consistent growth in keys, ARR, and RevPAR
✅ High-margin business and planned deleveraging
✅ First-mover advantage in underserved ultra-luxury hotel segment
Why You Might Avoid:
❌ Expensive valuation (P/E > 300x)
❌ Heavy reliance on 5 core assets
❌ Low public shareholding post-IPO (24.1%)
❌ Hospitality remains sensitive to economic shocks
Conclusion: A Premium Bet on India’s Tourism Future
Schloss Bangalore Limited’s IPO is not merely a financial transaction—it’s a long-term bet on India’s transformation into a global luxury travel destination. While valuation is steep, so is the prestige of The Leela brand. For investors with a high-risk appetite and long-term horizon, this IPO offers an entry into a premium, underpenetrated, and high-barrier market.
This is a story of heritage, global capital, and India’s aspirations of becoming a luxury destination. Whether you’re a discerning investor or a hospitality enthusiast, Schloss’s IPO is worth a closer look.
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