Indian Hotels to acquire balance 40% stake in Ginger Hotels. Also to raise funds to become debt free.

Indian Hotels Company Ltd (IHCL) while announcing the Q2 results for FY 22, informed about two more key decisions –

  1. It’s acquiring balance 39.84% of Roots Corporation Limited (operates Ginger brand of hotels) at an equity valuation of Rs 1,225 crore (i.e., for Rs 488 crore). Stake would be acquired from the existing shareholders making it a 100% subsidiary of IHCL.
  2. Further equity raise of Rs 4,000 crore (Rs 2,000 crore rights and Rs 2,000 crore through QIP) by IHCL to help fund expansion and become debt free in future.

Key related points to note –

  • Established in 2003, Ginger operates 55 hotels across the country with 26 more under development.
  • IHCL had a debt of Rs 6,000 crore as on September 30, 2021.
  • Covid had a significant impact on hotels business globally. September quarter has seen some turnaround after the 2nd wave impact on the June quarter. IHCL reported positive EBITDA of Rs 73 crore in September quarter as against Rs -149 crore for the June quarter. Though at net profit level the reported losses continue to be more than Rs 100 crore.

With Covid ebbing and people opening up for both business and leisure travel, hotels business along with airlines is a keen sector to watch over short to medium term.

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