The Rs 920 crore initial public offering (IPO) of Apeejay Surrendra Park Hotels is open for subscription on Monday, February 5, allowing investors to subscribe until Wednesday, February 7.
Priced between Rs 147 and Rs 155 per share, the IPO includes a fresh share sale of Rs 600 crore and an offer-for-sale (OFS) of Rs 320 crore.
The company has set aside Rs 10 crore worth of shares at a discounted rate of Rs 7 per share for eligible employees.
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But the looming question is, should you subscribe?
Anand Rathi Research suggests a ‘subscribe for long-term’ rating, citing a diverse hotel portfolio and fair valuations.
“The company possesses a varied portfolio of hotels across India, including owned, leased, and managed properties strategically situated in both major metropolitan areas and emerging cities. At the upper price band company is valuing at P/E of 68.8 times, of its FY23 earnings,” the report said.
Choice Broking recommends a ‘subscribe with caution’ stance, deeming the issue fully priced.
“Considering the positive macros for the hospitality sector, we are assigning a ‘subscribe with Caution’ rating for the issue,” it said.
Marwadi Financial Services assigns a ‘subscribe’ rating, highlighting a reasonable valuation compared to peers.
“We assign a ‘subscribe’ rating to this IPO as the company has diversified the Pan India portfolio of owned, leased, and managed hotels that are strategically located across metros and emerging cities. Also, it is available at a reasonable valuation as compared to its peers,” it said.
StoxBox by BP Equities advises to ‘subscribe,’ highlighting the company’s strategic initiatives and unique services.
“Looking ahead, Apeejay Surrendra Park strategic initiatives, including debt reduction and its unique blend of hotel and F&B services, position it favourably for sustainable growth and market leadership. Based on the above-mentioned positives, we give the issue a ‘subscribe’ rating for the issue” it said.
Mehta Equities suggests a ‘subscribe for long-term,’ considering the company’s growth prospects and debt reduction objectives.
“With established brands, strategic growth initiatives, and a resilient business model, the company is well-positioned to capitalise on emerging market trends.” it added with a subscribe tag.
Sushil Finance advises to ‘subscribe,’ acknowledging the company’s profitable turnaround from FY23 onwards.
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“The company business has become profitable from FY23 onwards and boasts successful hospitality brands with a diversified portfolio of hotels and restaurants across India, contributing to stable earnings. Further develop and strengthen the ‘Flurys’ brand in the retail food and beverage business through expansion plans,” it added with a ‘subscribe for long-term’ on the issue.
Established in 1987, Apeejay Surrendra Park Hotels operates under various brand names, including ‘The Park,’ ‘The Park Collection,’ ‘Zone by The Park,’ ‘Zone Connect by The Park,’ and ‘Stop by Zone.’
Additionally, it is involved in the retail food and beverage sector through its brand ‘Flurys.’
Prior to the IPO, the company secured Rs 409.5 crore from anchor investors, issuing 2,64,19,354 equity shares at Rs 155 each.
Notable investors in the anchor book include Troo Capital, Carnelian Capital, Julius Baer India, Citigroup Global, Integrated Core Strategies, and Societe Generale, alongside domestic mutual funds.
Apeejay Surrendra Park Hotels presently manages 27 hotels in categories such as luxury-boutique, upscale, and upper midscale across cities like New Delhi, Chennai, Hyderabad, Kolkata, Bangalore, and more, offering a total of 2,111 rooms as of August 2023.
The company also operates 80 restaurants, nightclubs, and bars, providing a diverse range of culinary experiences as of March 31, 2023.
Financially, the company reported a net profit of Rs 22.95 crore and a revenue of Rs 272.31 crore for the period ending on September 30, 2023.
In comparison, for the fiscal year ending March 31, 2023, Apeejay Surrendra Park Hotels recorded a net profit of Rs 48.06 crore with a revenue of Rs 524.43 crore.
For the IPO, 75 per cent of the net offering is allocated to qualified institutional investors (QIBs), 15 per cent to non-institutional investors (NIIs), and the remaining 10 per cent to retail investors.
JM Financial, ICICI Securities, and Axis Capital serve as the book running lead managers for the IPO, with Link Intime India acting as the registrar.
The expected listing date for Apeejay Surrendra Park Hotels on both BSE and NSE is Monday, February 12.
