Courtesy: https://www.chittorgarh.com/
Review By Dilip Davda on September 7, 2025
- The company is engaged in hospitality segment with its proposed six sub-brands.
• It will be the first modular hotel property managing company in India.
• So far it has posted minuscule financial performance with losses.
• Based on its recent financial data, the RI is aggressively priced.
• There is no harm in skipping this pricey RI which is a “High Risk/Low Return” bet.
ABOUT COMPANY:
Eco Hotels & Resorts Ltd. (EHRL) the company that was originally incorporated as Sharad Fibres and Yarn Processors Pvt. Ltd. and changed its name to Sharad Fibres & Yarn Processors Ltd. in 1993 finally changed its name to Eco Hotels & Resorts Ltd. In 2023.
Eco Hotels consists of six sub-brands: The EcoTM, The Eco SatvaTM, The Eco GrandTM, EcoXpressTM, EcoXpressTM and Eco ValueTM. The Company has three business models, taking hotels on long term lease to operate them; Taking hotels in management contract and EBOT (Enterprise Build Operate and Trade) is an investment model which involves construction and project management of newly built hotels using 3D volumetric construction technology. The technology will help construction of a 100-room hotel in just one year. The model has been conceived for sovereign and other foreign funds but it is very well suitable to Indian investors too. EHRL, a subsidiary of Eco Hotels UK PLC, is on a mission to transform the hospitality landscape in India with a keen focus on sustainability, innovative construction technology, and ambitious expansion strategies.
Eco Hotels intends to become a global brand that will stand for ‘eco-friendly hospitality’ with a clear commitment on net zero impact in its agenda and enabling its guests to reduce the environmental impact of their travel. Eco Hotels business strategy is to target the economy and middle scale segment of the hospitality industry where the demand is the strongest. For this purpose, Eco Hotels Group will trade through six brands that will give premium experience to mid-scale segment catering to the price sensitive segments. Eco Hotels Group will generate its primary revenue from operating hotel properties flagged as The EcoTM, The Eco GrandTM, EcoXpressTM and Eco ValueTM and its secondary revenue by developing new build assets through its proprietary turnkey hotel development programme called EBOT (Enterprise – Build – Operate – Trade), that will allow investors to own and operate hotels on a hybrid lease model.
Rapid footprint expansion is required for the brand’s success by establishing Eco Hotels Group with a nationwide presence in India. In order to achieve this, Red Ribbon is establishing Modulex, a modular buildings factory which will be able to deliver a 100-room hotel in 12 months. This access to offsite construction technology will enable Eco Hotels Group to rapidly expand its footprint and generate early cash flow when compared to hotels that are built using traditional construction methods.
Modulex is currently constructing India’s first steel modular buildings factory of its kind in Indapur, near Pune, with a production capacity of 200,000 sq. m. per annum. The factory will be designed to produce hotel rooms as per Eco Hotels requirements will dedicate production lines subject to firm orders from Eco Hotels. Modular construction technology is a well-established construction method in the United Kingdom used by international hotel chains such as Premier Inn, Citizen M, Days Inn, and others. In the USA, Marriott is an international brand that endorses and uses modular construction technology for its new build properties. Eco Hotels Group management believes that they will be the first hotel brand in India to adopt this construction technology. The offer document is silent on its employees’ strength data.
ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 12876808 equity shares of Rs. 10 each at a fixed price of Rs. 15.20 per share to mobilize Rs. 19.57 cr. The RI opens for subscription on September 08, 2025, and will close on September 17, 2025. The company is offering RI in the ratio of 1 for 4 to its eligible stakeholders as of the record date of August 29, 2025. The company is asking for Rs. 3.80 per share (25%) on application for number of shares applied, and the rest by one or more call as determined by the company from time to time. Post allotment, RI shares will be listed on BSE. The company is spending Rs. 0.50 cr. for this RI process, and from the net proceeds, it will utilize Rs. 9.74 cr. for giving advance to owners for renovation/construction of properties, Rs. 4.60 cr. for repayment of certain borrowings, and Rs. 4.73 cr. for investment in unidentified property for construction/renovation along with security deposit and general corporate purposes.
The RI is self-managed by the company itself, and Bigshare Services Pvt. Ltd. is the registrar to the issue.
Post-RI, company’s current paid-up equity capital of Rs. 51.51 cr. will stand enhanced to Rs. 64.38 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 97.86 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last four fiscals, the company has posted total income / net profit/ -(loss), of Rs. 0.20 cr. / Rs. 0.42 cr. (FY22), Rs. 0.01 cr. / Rs. – (1.87) cr. (FY23), Rs. 0.01 cr. / Rs. – (4.06) cr. (FY24), and Rs. 0.14 cr. / Rs. – (2.95) cr. (FY25). For Q1 of FY26 ended on June 30, 2025, it marked loss of Rs. – (1.19) cr. on a total income of Rs. 0.29 cr.). It posted minuscule financial performance with losses and has negative carried forward balance in its balance sheet.
On a consolidated basis, for the last two fiscals, it marked a total income/- (loss), of Rs. 0.56 cr. / Rs. – (5.61) cr. (FY24), and Rs. 1.09 cr. / Rs. – (3.55) cr. (FY25). For Q1 of FY26ended on June 30, 2025, it suffered a loss of Rs. – (1.35) cr. The company asking for premium for its loss-making performance is a big surprise.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy, based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 514402 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 15.75 on August 28, 2025, and opened on an ex-right basis at Rs. 15.20 on August 29, 2025. Since then, it has marked a high/low of Rs. 16.43 / Rs. 15.08. The scrip last closed at Rs. 15.73 as of September 05, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 44.69 / Rs. 14.31.
The counter is currently under ASM LT: Stage 1.
The promoters’ holding has been constant around 38.08% for the last three quarters ended with June 30, 2025. The counter is well managed above the RI price to tempt investors.
Conclusion / Investment Strategy
EHRL is engaged in hospitality segment with its proposed six sub-brands. It will be the first modular hotel property managing company in India. So far it has posted minuscule financial performance with losses. Based on its recent financial data, the RI is aggressively priced. Giant post-RI equity capital raises concern about its servicing going forward. There is no harm in skipping this pricey RI which is a “High Risk/Low Return” bet.
Review By Dilip Davda on September 7, 2025
Review Author
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detailed fundamental and financial analysis of companies coming up with IPOs helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
Courtesy: https://www.chittorgarh.com/
