The ₹920 crore initial public offering (IPO) of Apeejay Surrendra Park Hotels garnered a strong response from investors on the first day of bidding, with the issue subscribing over two times amid broader based demand across all three categories, especially the retail segment. The quota for retail investors was booked 5.2 times, while the portion set aside for qualified institutional buyers (QIB) and non-institutional investors (NII) received 1.16 times and 2.46 times bids, respectively, as per the BSE data. The Kolkata-headquartered company has reserved 75% of the issue for the QIB, 15% for high-net-worth individuals, and 10% for retail investors.
The three-day IPO of Park Hotels opened for subscription today with a price band of ₹147-155 per equity share of a face value of ₹1 each. At the upper band of ₹155 per share, the market cap of the company is pegged at around ₹3,307 crore.
The lot size is 96 shares and in multiples after that, which means the minimum application amount for retail investors will be ₹14,112. The maximum investment amount will be ₹193,440 for 13 lots, or 1,248 shares.
Ahead of the opening of the IPO, the company raised ₹409.5 crore from the anchor book by allotting over 2.64 crore equity shares at the upper end of the price band at ₹155 apiece. The shares were issued to 37 anchor investors, including Generale, Citigroup Global Markets Mauritius, Integrated Core Strategies (Asia) Pte Ltd, Bajaj Allianz Life Insurance Company, SBI General Insurance Company, Kotak Mahindra Life Insurance Company, and CLSA Global Markets Pte, as per the exchange data.
The IPO of Apeejay Surrendra Park Hotels, a subsidiary of the Apeejay Surrendra Group, is a combination of fresh issuance of equity shares worth ₹600 crore and an offer for sale (OFS) of shares worth ₹320 crore by promoters and existing shareholders. Out of the fresh equity issuance of ₹600 crore, the company intends to use ₹550 crore for repaying debts, while the remaining capital will be used to meet general corporate purposes. As of December 31, 2023, the total outstanding consolidated debt of the company stood at ₹582.28 crore.
Incorporated in 1987, Apeejay Surrendra Park Hotels is the 8th largest hotel chain amongst hotel chains with asset ownership in India, as per Horwath HTL report. It runs luxury boutique hotels in India under its brand, “THE PARK”, extending it further through “THE PARK Collection” and in upper-midscale categories with its brands “Zone by The Park” and “Zone Connect by The Park”. They have also established a presence in the retail food and beverage industry through its retail brand ‘Flurys’.
The IPO of Park Hotels has received a 'subscribe' rating from most brokerages, including Anand Rathi, Mehta Equities, Choice Broking, Marwadi Financial Services, Stoxbox, and others.
Rajan Shinde, research analyst at Mehta Equities, says, “We believe Apeejay Surrendra Park Hotels IPO allows investors to invest in the 8th largest hotel chain with asset ownership in India.”
The brokerage house has recommended investors to “SUBSCRIBE” to the IPO for a long-term perspective, citing that the company is well-positioned to capitalise on emerging market trends on the back of its established brands, strategic growth initiatives, and resilient business model.
Dhruv Mudaraddi, Research Analyst at Stoxbox has recommended a “SUBSCRIBE" rating, saying that Apeejay Surrendra Park Hotels Ltd. stands at the intersection of a resurgent hospitality industry and a post-pandemic economic rebound.
“With a diversified pan-India portfolio, the company effectively spreads its risk across various geographic regions and market segments, enabling it to capture opportunities in a granular fashion. Moreover, the company's historically high occupancy rates bode well for improving net margins, thereby contributing to its financial stability and growth trajectory. The valuation, although reasonable compared to peers, reflects market optimism in the relatively high P/E ratio, which stands at 56.4 times based on FY23 EPS,” it says in a report.
Choice Broking has given a 'Subscribe with Caution' rating for the issue, citing positive macros for the hospitality sector. The brokerage says the issue is fully priced, with the company demanding a P/E multiple of 63.1 times at the higher price band, which is in line with the peer average of 64.4 times.
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