Bhagwati Banquets & Hotels will list on bourses with public issue of 2,30,00,000 equity shares of Rs 10 each on May 17, 2007. It will raise Rs 92 crore from its IPO. Its price band was Rs 36 to Rs 40 but issue price got fixed at Rs 40.

Bhagwati Banquets & Hotels Snapshot

Subscription Numbers

Overall 1.83x

QIB 0.4239x

HNI 1.9815x

Retail 2.6246x

Details of IPO

• Issue price fixed at Rs 40
• To raise Rs 92 crore at this issue price
• Market cap of Rs 117.1 crore at issue price of Rs 40
• Public issue of 2,30,00,000 equity shares of Rs 10 each
• Net Issue to the public to constitute 63.02% of the post issue paid up capital of the co
• Price band of Rs 36 - Rs 40

Objectives of the Issue

• Proceeds from the Issue of shares are intended to be deployed for
• Capital expenditure for setting up a hotel in Surat
• General corporate purposes
• Meeting Issue expenses

Funds Requirement (Rs Cr)

Capital Expenditure for starting Hotel at Surat 77.8

General Corporate Purposes NA

Meeting Issue Expenses NA

Funding Plan (Means of Finance)

Particulars (Rs Cr)

Present Public Issue [�]

Term Loan proposed 12.50

The Issue

Number of Shares Being Issued	23000000
Lower End of Price Band (Rs)	36
Upper End of Price Band (Rs)	40
Raising @ Lower End of Rs 36 (Rs Cr)	82.8
Raising @ Upper End of Rs 40 (Rs Cr)	92
Number of Shares O/S Post Issue	29286400
Market Cap at Lower End of Issue	105.4
Market Cap at Upper End of Issue	117.1

IPO Grading

• CRISIL has assigned a CRISIL IPO Grade �1/5� grade to the IPO
• This grade indicates that the fundamentals of the issue are poor relative to other listed equity securities in India
• CARE has given the IPO grade 2/5
• CARE IPO Grade 2� indicates Below Average Fundamentals

Risk Factors

• Mr Narendra Somani is involved regulatory proceedings under Income Tax Law which are currently pending against him
• Total amount involved in all these cases is Rs 1.2 crore
• Negative Cash flows of the Company in the financial years 2003-04 and 2005-06
• Company is yet to start Construction of Building for which Rs 60 cr is allocated in the project cost
• Approval of plan alongwith NOC approval and building permission is yet to be received from SUDA* by the Company for its Surat project * Surat Urban Development Authority
• Due to the delay in the public issue there has already been a delay in the schedule of implementation of the project
• Promoters/promoter group has been allotted shares at a price in the last 12 months that may be lower than the issue price of the shares

About the Company

• Company has planned Rs 77.8 cr capex aimed at starting hotel operations in Surat
• Company is mainly in the business of banquet halls, marriage halls, party halls & plots, hotels, restaurants, & hotel related services
• At present the co operates & manages one Hotel under the name �The Grand Bhagwati� and a chain of Restaurants at various locations in Ahmedabad
• �The Grand Bhagwati�, a three star deluxe hotel
• Co proposes to set up a five star 100 room hotel at Surat
• Land on which the co proposes to construct the Hotel at Surat is owned by Lov Kush Properties, a 100% subsidiary of our Company Bhagwati Banquets And Hotels
• Expanding our presence in Ahmedabad through the opening and acquisition of new restaurants & starting a new five star hotel at Surat

Change in Shareholding

Pre Issue Post Issue

Promoters 77.79% 24.46%

Relatives of Promoters 15.72% 11.13%

Other tha Promoters (including Public) 6.50% 58.11%

QIBs 0.00% 6.30%

Financials

	FY05	FY06	9MFY07	FY07E	FY08E
Net Sales (Rs Cr)	13.4	23.1	24.6	33.0	50.0
Total Expenditure (Rs Cr)	10.0	17.9	19.1	25.4	37.5
Operating Profit (Rs Cr)	3.3	5.1	5.4	7.6	12.5
Operating Profit Margin (%)	24.8%	22.2%	22.1%	23.0%	25.0%
Net Profit (Rs Cr)	0.9	1.4	3.2	6.0	11.0
EPS (Rs)	0.3	0.5	1.1	2.0	3.8
Total Debt (Rs Cr)	7.4	14.4	13.3	-	-
P/E @ Rs 36 --- LOWER END (x)	116.2	77.1	32.8	17.6	9.6
P/E @ Rs 40 --- UPPER END (x)	129.2	85.7	36.5	19.5	10.6

Peer Comparasion

	Jaypee	Advani	Taj GVK	EIH	Kamat	Hotel Leela Ventures	Indian Hotels	Asian
CMP	64.25	207.0	180.7	102.4	149.9	57.9	146.5	837.2
EPS	4.9	4.3	7.4	4.8	12.0	2.0	3.1	24.9
P/E	13.2	47.8	24.5	21.3	12.5	29.3	46.6	33.7