The subscription window for Apeejay Surrendra Park Hotels IPO closed today on 7th February with the issue being subscribed a total of 62.90 times. The basis of allotment will be finalised tomorrow on 8th February and the investors may check the status through IPO registrar Link Intime India Pvt Ltd website.
Of the total, the retail portion was subscribed 31.96 times whereas the NII and QIB portion were subscribed 55.25 times and 79.23 times respectively. The employees quota was subscribed 5.72 times. The figures exclude the anchor allocation of 6.80 lakh shares. Combined, the investors placed bids for shares worth Rs 32,136.85 crore against a issue size of Rs 920 crore.
Apeejay Surrendra Park Hotels limited IPO is a 100% book-built issue worth 920 crore which consists of fresh issue of worth Rs 600 crore and an offer for sale worth Rs 320 crore. The issue was open for subscription between 5th February 2024 and 7th February 2024 and is scheduled to list on main board exchanges on 12th February 2024.
The price band of the issue was set at Rs 147- Rs 155 at a face value of Rs 1 per share. The lot size was of 96 shares, making the minimum investment amount a total of Rs 14,880. 75% of the issue was reserved for QIB investors, 15% for HNIs and 10% for the retail investors.
Founded in 1987, Apeejay Surrendra Park Hotels Ltd. commands a notable presence in India’s hospitality sector, operating under various brands such as “THE PARK” and “THE PARK Collection.” The company boasts a diverse portfolio comprising 30 hotels, including owned, leased, and managed properties, alongside a strong foothold in the retail food and beverage segment through brand name ‘Flurys’.
Allotment on 8th February
According to the IPO documents, the basis of allotment for the Apeejay Surrendra Park Hotels IPO will be finalised on 8th February 2024. The investors may check the allotment status through the website of issue registrar Link Intime India Private Limited.
- The allotment of shares will be finalised on 8th February 2024.
- The unblocking of funds and refunds initiation will start on 9th February.
- The listing of shares on exchanges will take place on 12th February 2024.
The company has said that the proceeds are earmarked for debt repayment/prepayment and general corporate purposes. While the company won’t directly benefit from the Offer for Sale, listing on stock exchanges is anticipated to augment visibility and brand recognition, bolstering its market presence.
Strong Financials and valuation
Against the backdrop of India’s projected GDP growth of 6.3% per annum for FY24 to FY29, the hospitality sector showcases promising signs of resurgence. Noteworthy growth rates in supply and demand underscore the sector’s potential, presenting an opportune moment for investors to capitalize on burgeoning market dynamics.
Apeejay Surrendra Park Hotels limited has exhibited commendable financial growth, with revenue reaching Rs 524.43 crore in March 2023. Following a milestone of profitability in 2023, the company demonstrated favourable trends in key financial metrics, including an improving debt to equity ratio and ascending revenue per room, indicative of robust operational performance.
- March 2022: Profit of Rs 28.2 crore on a revenue of Rs 267.83 crore
- March 2023: Profit of Rs 48.06 crore on a revenue of Rs 524.43 crore
- September 2023: Profit of Rs 22.95 crore on a revenue of Rs 272.31 crore
- The company reported assets worth Rs 1,380 crore in September 2023.
The company leverages over five decades of industry experience, carving a niche with the highest occupancy rates in the boutique hotel segment. Moreover, the company benefits from formidable entry barriers, including regulatory hurdles and land acquisition complexities, bolstering its competitive edge in the market. Despite its strengths, the company faces inherent risks characteristic of the hospitality sector, including regulatory uncertainties, policy fluctuations, and intensified competition. Elevated land costs and financing challenges further underscore the sector’s dynamic nature, necessitating robust risk mitigation strategies.
A comprehensive evaluation of the company’s financials and industry benchmarks suggests a reasonable valuation. With PE and PB ratios aligning closely with industry medians, coupled with promising growth prospects, the IPO presents an enticing investment proposition for discerning investors seeking exposure to India’s burgeoning hospitality landscape.
Key ratios (As on 31 March 23)
- EPS: 2.75
- Return on net worth: 8.65%
- Net asset value per share: 31.81
- Debt to equity ratio: 1.02
- P/E: 56 (based on 2023 eps and maximum issue price)
Investor Sentiments:
Investor sentiment towards the IPO remains positive, buoyed by its reasonable valuation and promising growth trajectory. Recent governmental initiatives aimed at fortifying the tourism sector further bolster the company’s outlook, as evidenced by its 23% premium trading in the grey market. However, investors should be careful of the grey market premium (GMP) as they are not regulated.
