Universities carry the risk in Elevate Campuses' hostels

Been reading Elevate Campuses' draft IPO papers (DRHP), and the business is not what it looks like. It is India's largest hostel company: 66,272 beds at universities like Manipal University Jaipur, across 20 Indian cities and Dubai. Yet it has only 57 permanent employees. Cooking, laundry, security and housekeeping are all done by contractors.

Let's understand the business model: a university sells its hostels to Elevate and signs a 50 to 60 year hostel service agreement. Students pay Elevate for the whole year or semester in advance, and the cash sits in mutual funds and fixed deposits until it is needed. Fees rise 5 to 6% a year by contract. And it is the university that promises the hostels stay 80 to 100% full, about 83% on average. If fewer students turn up, the university pays the shortfall by a pre-agreed formula. If it keeps happening, some contracts let Elevate sell the buildings back to the university.

That is why they do not book most of this as hostel income. The hostel is treated as a finance lease. Of ₹369.8 crore of revenue in FY25, ₹158.0 crore was interest on those leases and ₹50.4 crore was rent. Only ₹160.0 crore, or 43%, came from actually running the hostels. Occupancy for the year was 99.47%.

The DRHP says the minimum guarantees come from 3 universities, and 3 universities gave Elevate 89% of its FY25 revenue, one in Haryana alone 51.4%. The other owned campuses are gone. It sold its Karnataka hostels back to that university for ₹207.5 crore in April 2025, and County in Bengaluru and Woodstock, its 2 campuses not tied to a university, went empty in June and September 2025. Those 2 were 5.8% of revenue.

The IPO will fund Elevate's other business: schools. Elevate owns 16 K-12 schools in India and 2 in Dubai. It rents these schools to operators on 15-30 year leases, with the operators paying for taxes, insurance and maintenance. The Indian schools are owned by companies controlled by Elevate's promoter, Hillhouse. Elevate will use ₹1,100 crore of the ₹2,100 crore IPO to buy them from Hillhouse. So more than half of the IPO money is going towards buying these schools.

How an Elevate Campuses hostel contract works

Its hostel service agreements with universities, as the DRHP describes them. The university, not Elevate, carries the risk of empty beds.

Elevate Campuses DRHP, Our Business and Risk Factors · As of 31 Aug 2025

Over half of Elevate's revenue is booked as lease income

Revenue of ₹369.8 crore in FY25, by how the DRHP books it. Interest and rent on the hostels come to ₹208.5 crore, or 56%. Running them brought in ₹160.0 crore.

₹ CRORE, FY25

• Interest on finance leases158.0 42.7%
• Rent50.4 13.6%
• Running the hostels (facility management fees)160.0 43.3%
• Other1.4 0.38%

A university's 50-year commitment, booked as a loan

A finance lease counts a hostel as sold on instalments, so Elevate books the interest.

Elevate Campuses DRHP, restated financials, note 25 · FY25

3 universities are 89% of Elevate's revenue

Share of revenue by campus, FY23 to FY25. The Haryana university alone is 51.4%. The 3 campuses folded into Other are the ones sold or emptied in 2025.

SHARE OF REVENUE, %

Haryana universityManipal JaipurHimachal universityOther: sold or emptied

Other is 3 campuses: 1 sold back to its university in April 2025, and 2 empty since 2025.

Elevate Campuses DRHP, customer concentration note · FY23 to FY25

Sources

• Elevate Campuses, Draft Red Herring Prospectus dated 28 September 2025 (SEBI, PDF): 66,272 beds and 20 Indian cities at 31 August 2025 (page 298); 57 permanent employees (67); hostel service agreements of 50 to 60 years with fee escalation of 5 to 6% a year and put options in some (328); blended minimum occupancy guarantee of about 83% (300), 80% to 100% and the finance lease judgement (414); shortfall paid by the HEI by formula (314); fees in advance, held in mutual funds and fixed deposits (438); FY25 revenue ₹3,698.11 million: interest on finance leases ₹1,580.23 million, rent ₹504.31 million, facility management fees ₹1,599.68 million (429); occupancy 99.47% (149); 89.00% of revenue from 3 HEIs (24), HEI Haryana 51.40% (439); HEI Karnataka business transferred for ₹2,075 million (48); County and Woodstock vacant, 3.60% and 2.20% of revenue (56); K-12 leases of 15 to 30 years (328); ₹11,000 million of the proceeds for the K-12 entities held by K-12 HoldCos controlled by Hillhouse funds (129 to 130)
• The same DRHP on SEBI's public issues listing, filed 7 October 2025
• Elevate Campuses, Red Herring Prospectus dated 17 September 2026 (PDF): a fresh issue of up to ₹21,000 million and no offer for sale (cover); ₹11,000 million, about 52.38% of the gross proceeds, for the K-12 entities from fellow subsidiaries of the promoters, and ₹7,500 million to repay borrowings (page 40)