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Dream Gateway Hotels to take IPO route to expand Kolkata Holiday Inn

The hotel has been operational since February 2017 and the company is expecting a revenue of Rs 20 crore in the current fiscal, Jain said

Press Trust of India  |  Kolkata 

Representative Image (Photo: Shutterstock)
Representative Image (Photo: Shutterstock)

Ltd, an arm of Kolkata-based real estate developer Jain Group, is planning to dilute 25 per cent stake with its maiden on BSE's small and medium enterprise platform by March 2018.

The company operates the Holiday Inn hotel in Kolkata under a management contract with Intercontinental Hotels Group.

"We are at an advanced stage of launching an and the issue will be completed over the next two months," Dream Gateway director told PTI.

"We are looking at raising Rs 35-37 crore from the public issue to fund an expansion of the property, diluting 25 per cent stake," he said.

The hotel has been operational since February 2017 and the company is expecting a revenue of Rs 20 crore in the current fiscal, Jain said.

The company is optimistic of a valuation of around Rs 150 crore.

However, according to an analyst tracking the hospitality sector, the expected valuation is on the "higher side".

"With limited data available, the hotel would ideally be valued at Rs 110-120 crore based on replacement cost estimates," Managing Director-India (Hotels & Hospitality Group) JLL, Mandeep S Lamba, said.

Given the hospitality industry has been stressed for a while and as Kolkata is expected to see a continued increase in the inventory of hotel rooms, the market is likely to see some corrections in rates going forward, he said.

Hotels are typically valued by (DCF) methodology which is considered the gold standard. Other methodologies include multiples and replacement costs.

Jain said that the cash raised through will be used in expanding the 137-room Kolkata property to 215 rooms with an investment of Rs 60-70 crore.

The company also has two hotels in Siliguri and Durgapur in the pipeline.

First Published: Sun, January 07 2018. 16:34 IST
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