Himal Water Park & Village Hotel Limited (HWPL) has submitted its Initial Public Offering (IPO) proposal to the Securities Board of Nepal (SEBON). The company plans to issue 41,65,000 shares at a par value of Rs. 100 per share, aiming to raise Rs. 41.65 crore. Kumari Capital Limited has been appointed as the issue manager for the IPO. The shares can only be floated to the general public after receiving approval from SEBON, marking a significant milestone for investors seeking opportunities in Nepal’s hotel and tourism sector.
Financial Risk Profile and Ratings
CARE Ratings Nepal Limited (CRNL) has assigned an issuer rating of ‘CARE-NP B- (Is)’ to HWPL, indicating a high level of risk in the company’s ability to service its financial obligations on time within Nepal. The company’s long-term bank facilities have been reaffirmed at ‘CARE-NP B-’, and short-term facilities at ‘CARE-NP A4’. The ratings reflect Himal Water Park & Village Hotel Limited (HWPL)’s current financial constraints, including modest income levels, relatively high interest obligations, stretched liquidity, and reliance on promoter support for operational and financial needs.
Key Rating Weaknesses
Himal Water Park & Village Hotel Limited (HWPL)’s financial risk profile remains weak due to limited operational history and a small scale of operations. The company commenced partial operations in December 2021 and reported a total operating income of Rs. 101 million in FY24, a 24% increase from FY23. While occupancy rates improved to approximately 40% in FY24, cash accruals remain insufficient to cover interest obligations, necessitating equity infusion from promoters.
The long gestation period typical of the hotel industry poses additional challenges, as Himal Water Park & Village Hotel Limited (HWPL)’s 63-room premium hotel requires time to stabilize operations and recover fixed costs. Furthermore, the company is exposed to cyclicality, intense competition, geographic concentration risk, and volatile interest rates, all of which could affect profitability and operational sustainability.
Key Rating Strengths
Despite these challenges, Himal Water Park & Village Hotel Limited (HWPL) benefits from experienced promoters and management, led by Chairman Mr. Sunil Kumar Khetan, who has three decades of hospitality experience. The hotel’s strategic location in Birgunj, Nepal’s commercial gateway, provides significant opportunities for both leisure and business tourism.
Himal Water Park & Village Hotel Limited (HWPL)’s association with Clarks Resort by 1589 Hotels Private Limited under a 20-year management contract enhances its operational credibility. This partnership is expected to attract higher guest footfall, particularly from Indian visitors, and strengthen the hotel’s brand recognition and long-term revenue prospects.
Industry Outlook of Himal Water Park & Village Hotel Limited (HWPL)
The tourism and hospitality sector in Nepal has shown robust recovery, with over 1.147 million tourists in CY24, a 13.1% increase compared to CY23. The government has declared 2023-2033 as the Tourism Decade, emphasizing infrastructure development and tourism promotion. Key performance indicators such as average room rates, revenue per available room, and occupancy have steadily improved, and near-term prospects remain positive, driven by increased domestic tourism, leisure events, and business travel.
Company Overview and Future Prospects
Himal Water Park & Village Hotel Limited (HWPL), incorporated on August 8, 2012, operates a four-star hotel spread over 11,551.53 sq. meters in Birgunj, offering 63 rooms with modern amenities. The company began partial operations in December 2021 and expects to commence full-scale operations by the end of FY2025.
The IPO proceeds are expected to strengthen the company’s financial base, expand operations, and enhance its service offerings, positioning Himal Water Park & Village Hotel Limited (HWPL) to capitalize on the growing tourism demand in Nepal.
The company’s ability to improve occupancy rates, boost average room rates, and achieve consistent cash flows will be crucial for strengthening its financial position and enhancing debt service coverage. The IPO provides an opportunity for investors to participate in the growth of a premium hospitality project in Nepal, supporting both the local tourism ecosystem and the company’s long-term expansion plans.
