Valor Estate to demerge hospitality biz; check the allotment ratio

Real Estate company Valor Estate Ltd, formerly known as DB Realty, is set to demerge its hospitality business. The process of demerger is underway and the draft scheme has been approved by NSE and BSE and is being processed by the capital market watchdog Sebi.

According to the annual report of the company, the scheme will be effected in next 8-10 months and the company has fixed the allotment ratio in 1:1. It means that the shareholding pattern of the demerged entity will be a mirror image of the shareholding pattern as Valor Estate Ltd.

On the back of this announcement, shares of Valor Estate Ltd tumbled as much as 5 per cent during the trading session to Rs 152.10 on Monday, commanding a total market capitalization slightly above Rs 8,300 crore. The scrip had settled at Rs 160.45 in the previous trading session.

Valor Estate currently has two hotels with 563 keys and it is aiming at five hotels with 2,954 key in the coming months. In short, the company is aiming at 3-4 large upscale assets in next 3-4 years, said the presentation. The demerged hotel entity shall have its own corporate identity, capital structure, board, management, branding.
 

In the real estate segment, Valor Estate has a land bank of more than 513 acre. In the residential space, the company commands ongoing projects of 26.4 million square feets (msf), while its has project for 5.3 msf in the pipeline. In the commercial segement, it has current projects for 13 msf while 186 acres of leasable land bank.
 

The ongoing, upcoming, and forthcoming residential projects are likely to contribute the most to the overall revenue of Valor Estates, estimated at Rs 28,000 crore. The commercial realty business is expected to generate an annuity revenue potential of Rs over 1,790 crore, adding to the financial stability. It sees an annual revenue of Rs 2,000-2,500 crore by FY31 for the hotel biz.
 

Valor Estates current debt-to-equity ratio stood at 0.34 as of September 30, 2024. Net of the hospitality loan, its debt-to-equity ratio stood at 0.23. The hospitality business has an occupancy ratio of 82 per cent.