Things to know for prospective investors about IPO of Chandragiri Hills Limited; high chance of lottery for 10 units

Company Profile:

Chandragiri Hills is a quick getaway just 7 km away from Thankot, Kathmandu. Established with a mission to create an “integrated tourist destination” has its historical significance as well. It was established in 2009 and located in Chandragiri hills. This project provides cable car services to the peak of the hill with religious importance, parks, and restaurants. The cable car operated on August 08, 2016. Initially, the company was named Kathmandu Fun Park Private Limited during registration and later was converted into a public limited company, however, the name was changed to Chandragiri hills limited on May 16, 2016.

The company is promoted by 15 individuals with Mr. Hem Raj Dhakal and Mr. Chandra Prasad Dhakal as the largest shareholders with a 21.8% stake each. Mr. Chandra Prasad Dhakal is the chairman of the company.

About the Issue:

The company is issuing 15,34,091 units as IPO to the general public at the par value of Rs. 100 per share to raise a capital worth Rs. 15.34 crores.

The company is set to issue a total of 15,34,091 lakhs units of shares from Poush-24, 2077. A total of 61,364 units i.e. 4% worth Rs, 61.36 lakhs is segregated for the employees of the company and a total of 76,705 unit shares i.e. 76.70 lakhs is segregated for a mutual fund. The remaining 13,96,022 units shares are for the general public. The earliest closing date is Poush-28, 2077. If the issue is not subscribed till the earliest closing date then the issue will be extended till Magh-09, 2077.

Locals of Chandragiri Hills Limited get shares as high as 80 units per individual

Global IME Capital Limited has been appointed as the issue manager.

ICRA Rating:

ICRA Nepal has assigned an issuer rating of [ICRANP-IR] BB to the proposed Initial public offering (IPO) of Chandragiri Hills Limited (CHL). ICRA Nepal has assigned a long-term rating of [ICRANP] LBB to the long-term loans and a short-term rating of [ICRANP] A4+ to the short-term loans of CHL. The ratings are on Watch with negative implications.

Key Grading Strengths:

• Financially resourceful promoters
• Unique tourist attraction contributing to good revenue base over a short period of time
• The tourism sector remains a priority for the government

Key Challenges:

• Covid-19 pandemic would have a significant impact on the hospitality sector
• Weak financial profile with high leverage and sub-par coverages ratios
• Limited track record of operations for cable car; project stabilization risk high for the resort
• The fragmented hotel industry and increasing competition

Board Members:

The objective of IPO Issuance:

Capital Structure:

Shareholding Pattern:

Additional Information:

Dividend Expectation:

Financial Highlights:

How much to apply?

If we see the recently concluded IPO’s of Prabhu Life Insurance Limited; more than 10.49 lakh applicants applied for the issue and we assume that the same or even more craze prevails in Chandragiri Hills Limited’s IPO too. Since the 10 kitta rule exists for IPO; only 1,39,602 applicants will be lucky enough to get the 10 shares of Chandragiri Hills.

To sum up, if the same number of applicants (or more) who applied for previous IPO’s apply for this issue then there is a high probability of getting 10 units through a lucky draw. So, it is advisable to apply only 10 units (minimum) in the IPO issue of Chandragiri Hills Limited.