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Apeejay Surrendra Park Hotels IPO Details: Date, Price, Size, GMP & Review

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Apeejay Surrendra Park Hotels – About the Company

Incorporated in 1987, Apeejay Surrendra Park Hotels Limited is the 8th largest hotel chain amongst hotel chains with asset ownership in India providing the hospitality services under the brand name of "THE PARK" and similar names. The company is also involved in the retail food and beverage industry through its retail brand 'Flurys under which it operates 40outlets with multiple formats such as kiosk format, café format and restaurant format with a successful track record of industry-leading margins.

Presently the company is operating with 27 hotels and 80 restaurants, nightclubs and bars, offering a wide selection of culinary experiences to customers. Its hotels accommodate a total of 2,111 rooms and are located in various cities in India including New Delhi, Mumbai, Bangalore, Kolkata, Hyderabad, Jaipur, Indore, Coimbatore, Chennai, Jodhpur,Goa, Jammu, Visakhapatnam, Pathankot and Port Blair. All the hotels are spread into different categories like luxury boutique, upscale, and upper midscale.

The hotels are popular band names "THE PARK", "THE PARK Collection", "Zone by The Park", "Zone Connect by The Park" and "Stop by Zone" and restaurants are under the brand names Zen, Mist, The Street, Verandah, Italia, 601, Bamboo Bay, Monsoon, The Bridge, Lotus, Aish, Saffron, Fire, Vista, Bazaar and Love and it is operating with the total of 1,923 employees.

As per the Horwath HTL Report, THE PARK hotels recorded a RevPAR of approx Rs 5,571.00, an occupancy rate of 91.77% and an average room per revenue of Rs 6.070.51 for the year ended March 31, 2023. High occupancy levels at The PARK hotels enable strong RevPAR. The occupancy and RevPAR indices reflect that the Company's parameters are ahead of the market in 29 of the 30 data points.

Apeejay Surrendra Park Hotels IPO Objectives

As per the draft red herring prospectus (DRHP) total issue size is Rs 920 crore, in which Rs 320 crore is offer-for-sale (OFS), and the remaining Rs 600 crore will be the fresh issue of shares that will go directly to the company. As per the offer document, Rs 550 crore from the net proceeds will be utilized for repayment/prepayment, in full or in part of certain outstanding borrowings availed by the company.

The remaining part of the fund raised from this IPO will be used for general corporate purposes. One of the other objectives of this IPO is getting the benefits of listing of the Equity Shares on the Stock Exchanges including enhancement of the Company's visibility, and brand image among its existing and potential customers and creation of a public market for the equity shares in India.

Apeejay Surrendra Park Hotels IPO Details:

IPO Open Date 05-Feb-24
IPO Close Date 07-Feb-24
Basis of Allotment 12-Feb-24
Listing Date 12-Feb-24
Face Value Rs 1 per share
Price Rs 147 to Rs 155 per share
Lot Size 96 Shares
Total Issue Size [.] shares
(aggregating up to Rs 920.00 crore)
Fresh Issue [.] Shares, aggregating up to Rs 600.00 crore
Offer For Sale [.] Shares, aggregating up to Rs 320.00 crore
Issue Type Book Built Issue IPO
Listing At BSE & NSE
QIB Shares Offered Not less than 75% of the Net Issue
Retail Shares Offered Not more than 10% of the Net Issue
NII (HNI) Shares Offered Not more than 15% of the Net Issue

 

Apeejay Surrendra Park Hotels IPO Issue Price & Size

The issue price of the Apeejay Surrendra Park Hotels is in the range of Rs 147 to Rs 155 per share. The total issue size of Apeejay Surrendra Park Hotels is Rs 920 crore, out of which Rs 320 crore is offer-for-sale (OFS) of shares, and the remaining Rs 600 crore will be the fresh issue of shares.

Apeejay Surrendra Park Hotels IPO Launch Date

The launch date of Apeejay Surrendra Park Hotels IPO is 5th Feb 2024, which means the IPO will be open between 05 Feb 2024 to 07 Feb 2024. The Basis of Allotment date is 08 Feb 2024, while the listing date of the Apeejay Surrendra Park Hotels IPOis 12 Feb 2024.

Apeejay Surrendra Park Hotels Financial Statements:

Particulars (Rs in Million) FY23 FY22 FY21 CAGR
Revenue from Operations 5,061.30 2,550.20 1,788.30 68.23%
Other Income 183.00 128.10 114.60
Total Income 5,244.30 2,678.30 1,902.90 66.01%
Operational Expenses 1680.93 995.70 822.64
Other expenses 1792.42 1099.67 851.80
EBITDA 1770.95 582.93 228.46 178.42%
EBITDA Margin% 34.99% 22.86% 12.78%
Depreciation 492.98 400.72 377.00
Interest 623.30 600.10 568.80
Exceptional Loss - - (150.70)
Profit/Loss Before Tax 654.67 (417.89) (868.04)  
Total tax 174.05 (135.87) (109.20)
Profit/Loss After Tax 480.62 (282.02) (758.84)  
PAT Margin% 9.50% -11.06% -42.43%  
EPS Diluted (Rs) 2.75 (1.61) (4.34)  

Source: RHP

Apeejay Surrendra Park Hotels Financial Performance

The revenue of the company was at Rs 506.13 crore in FY23 which has grown at a CAGR of 68% from Rs 178.8 crore in FY21. The EBITDA of the company has grown well for the same period achieving Rs 177.1 crore in FY23 registering a CAGR of 178% from Rs 22.8 crore in FY21.

The company reported a Net Profit of Rs 48        crore in FY23 which is not comparable to previous years, as the company has incurred a loss of Rs 28.2 crore and Rs 75.88 crore in FY22 and FY21 respectively. The EBITDA margin of the company was around 35% in FY23, which has improved quite well from 12.8% in FY21. And the Net Profit margin of the company in FY23 was 9.5% of the revenue.

Apeejay Surrendra Park Hotels IPO Promoters & Shareholding of the Company

Apeejay Surrendra Trust and Great Eastern Stores Private Limited are the main promoters of the company holding 17.18% and 30.06% stakes in the company. In the promoters group, Apeejay Private Limited is a major shareholder having a 19.75% stake in the company. For other promoters groups and shareholders of the company see the table below.

S.No. Name of the Shareholder Number of Equity Shares Held %  of pre-Offer Equity Share
capital (%)
  Promoters (A)    
1 Karan Paul 100 Negligible
2 Priya Paul Nil Nil
3 Apeejay Surrendra Trust (through its trustees) 3,00,02,400 17.18%
4 Great Eastern Stores Private Limited 5,25,00,000 30.06%
  Total (A) 8,25,02,500 47.24%
       
  Promoters Group (B)
1 Apeejay Private Limited 3,44,97,500 19.75%
2 Apeejay Engineering Private Limited 1,45,00,000 8.30%
3 Apeejay Agencies Private Limited 1,45,00,000 8.30%
4 Apeejay House Private Limited 1,45,00,000 8.30%
5 Apeejay Surrendra Management Services Private
Limited
39,99,760 2.29%
  Total (B) 8,19,97,260 46.94%
       
  Selling Shareholders (C)    
1 RECP IV Park Hotel Investors Ltd 96,66,340 5.53%
2 RECP IV Park Hotel Co-Investors Ltd 4,95,660 0.29%
  Total (C) 1,01,62,000 5.82%
 
  Grand Total (A+B+C) 17,46,61,760 100.00%

Source: RHP

As per the DRHP, promoter Apeejay Private Ltd, promoter group selling shareholder, would be offloading shares worth Rs 296 crore, while RECP IV Park Hotel Investors Ltd and RECP IV Park Hotel Co-Investors Lts will be offloading shares worth Rs 23 crore and Rs 1 crore respectively.

Why Invest in Apeejay Surrendra Park Hotels IPO?

Investing in the hospitality industry was one of the riskiest bets at the time of the pandemic that spread worldwide and affected almost every sector and industry. But now the scenario is different all the sectors are doing well, including the hotel and restaurant industry. Hence, you can invest in the hospitality sector or companies operating in this industry. But from the individual company's perspective, you need to analyse the various factors that can affect their performance due to fundamental reasons.

Also Read: What to Check Before Buying IPO: Things to Know & Is it Safe

In this case, while investing in the Apeejay Surrendra Park Hotels IPOyou need to check the fundamentals and various other aspects of the company. You can check the competitive strength of the company which helps to grow the business and revenue of the company. And also analyse the risk factors that can affect the performance and future growth of the company. In respect of the same, we brought here the strengths and risks that are associated with Apeejay Surrendra Park Hotels.

Also Read: What are the Risk Factors Involved in Applying for an IPO

Competitive Strengths:

  • Owing to significant growth in the tourism industry, the hospitality business is also improving providing ample opportunity for hotels and restaurant owners to expand their business and earn revenue from increasing demand for the accommodation and food or beverages catering services. Apeejay Surrendra Park Hotels is also going to benefit from the growth of the hospitality sector with significant growth opportunities to expand its operations.
  • The company is the 8th largest hotel company in India, and to enhance its market share company has built successful hospitality brands through product innovation and service excellence to attract the customers through a diversified and complete hospitality services.
  • The company operates 27 hotels across the upscale to upper midscale category, with a pan-India presence representing 2,111 rooms. It has grown its business geographically with the opening of 10 managed and leased hotels in the last 3 years, adding 499 rooms to its total portfolio.
  • For FY23, company March 31, the company has managed to achieve an average occupancy level of 91.55% for its owned hotels. This efficiency shows a strong operating track record of high occupancy, competitive average room rates and RevPAR for its hotel properties.
  • As the company is also involved in the food, beverages and entertainment business, this segment is adding stable and non-cyclical earnings while complementing its hotel business. As per the Horwath HTL Report, "THE PARK" hotels' food and beverage contribution to total revenue for Fiscal 2023, Fiscal 2022 and Fiscal 2021 is higher than the average food and beverage contribution to total revenue of select listed hotel companies.
  • It’s “Flurys" an iconic brand that has a distinctive track record in the retail food and beverage chain and is a widely recognised brand in India. “Flurys” is our established retail food and beverage brand under which it operates – 70 outlets with multiple formats such as kiosk format, café format and restaurant format with a successful and profitable track record of industry-leading EBITDA margins providing a diversified, resilient, and scalable business model for the company.
  • Further, as a part of our expansion strategy, we intend to leverage our expertise in the hospitality industry to develop and grow its presence in the retail food and beverage industry.
  • The company has recently opened a roadside motel in Nandakumar, Purba Medinipur, Kolkata under the brand "Stop by Zone", an economy motel brand that aims at providing convenient accommodation as part of its future development plans, it has currently leased 9 additional properties in Kolkata for development of roadside motels.
  • As a part of expansion plans, its hotel development pipeline consists of the expansion of two of its existing owned hotels in Visakhapatnam and Navi Mumbai, and the development of its embedded land bank at Pune, aggregating to 380 rooms.
  • Further, as part of its future development plans, the company also intends to utilise the land bank for the construction of a new hotel at Jaipur, and utilise the land bank of 3.36 acres to construct a hotel and serviced apartments on the Eastern Metropolitan Bypass side, Kolkata.
  • It has also entered into agreements to open three leased and licensed hotels in Patiala, Punjab; Chettinad, Tamil Nadu; and West Bengal, representing 122 rooms. And entered term sheets to open 16 managed hotels, to further strengthen its reach in tier 2 and tier 3 cities including, Goa, Srinagar, Darjeeling, Siliguri, Manali, Patna, Muzaffarpur, Alibag, representing 1,383 rooms.
  • The company has an experienced and qualified management team and board of directors who have in-depth knowledge of hotel operations and hotel property development. The team has a strong understanding of the local hospitality and property market and has successfully developed its business through brand-building initiatives and strategic alliances.
  • To improve its operational efficiencies it is implementing holistic management plans for the hotels. These include rationalizing sourcing costs, effective workforce management using technology to enhance productivity and drive occupancy and efficient energy management.
  • At the financial end, the performance of the company in the last three years was impressive, especially in terms of revenue and operating profit growth. Its revenue from FY21 to FY23 grew at a CAGR of 68% and EBITDA has exceptionally grown at a CAGR of 178% for the same period.

Also Read: Types of Risks Associated with Investing in the Stock Market

Risks Factors:

  • The hotel industry and retail food and beverage industry are intensely competitive and its inability to compete effectively may adversely affect the business, results of operations, financial condition and cash flows of the company.
  • The hotel and hospitality industry in India is subject to seasonal variations and cyclical, as demand generally follows key macroeconomic indicators. Hence, its business is subject to seasonal and cyclical variations that could affect the business operations of the company.
  • Being involved in the hospitality business, the company is exposed to risks associated with the development of hotel properties and land banks. Any delay in the construction of new hotel buildings or expansion of the existing properties may have an adverse effect on its business.
  • The company is also exposed to risks associated with the construction and development of serviced apartments at EM Bypass, of which the Company has no experience. Delays in the construction of serviced apartments by third-party developers or the inability of developers to construct the residential project as per required specifications have affected its business.
  • As per the total income in Fiscal 2023, a large portion of its revenue (approximately 75%) is realised from its top five owned hotels with THE PARK Kolkata contributing 21.75% to the total income in FY023. Any adverse development affecting these hotels or the regions in which they operate may adversely affect the business operations and financial condition of the company.
  • The company derives a significant portion of its room revenue from corporate accounts and from leisure customers, contributing approximately 40% of each of the total room revenue in FY23. Changes in preferences of travellers due to increased use of telepresence equipment, travel cost, habits of spending, and various other factors may affect the demand for hotel rooms that may adversely affect the business operations and financial condition of the company.
  • The company does not own the trademark and logo associated with the “Apeejay” and “Apeejay Surrendra" brand names and derives the right to use from the Brand Usage and Service Agreement. In the event, such an agreement is terminated or not renewed, the company may not be able to use these brand names and associated marks, which may adversely affect its business operations.
  • Certain of its hotels are located in buildings and lands which have been leased to the company by third parties. If the company is unable to comply with the terms of the lease agreements, renewing the agreements or entering into new agreements may have an adverse effect on its business.
  • Unexpected economic conditions and worldwide crises like the COVID-19 pandemic or any future pandemic or widespread public health emergency could also affect its business.
  • While pursuing its strategy of expansion through the acquisition of new hotels, it is also exposed to increased risks from future acquisitions, which we may not be able to successfully consummate or such acquisitions may not yield the intended results leading to an adverse effect on its business.
  • While operating its business it has incurred losses in the last few years that have generated negative cash flows from investing and financing activities in past. Any negative cash flows in the future could adversely affect the business operations and financial condition of the company.

Apeejay Surrendra Park Hotels IPO Grey Market Premium (GMP)

Grey Market Premium or GMP is an unofficial ecosystem that shows the speculative listing price of the unlisted company that is IPO-bound and likely to be listed soon after launching the IPO for bidding. However, GMP is not a reliable factor in knowing the actual share price of an unlisted company, as there are various factors that affect the stock market and individual prices of the stocks.

Also Read: What are the Top Factors Affecting the Stock Market in India

GMP is a premium over the issue price that is speculator or investor is ready to pay above the upper band of IPO price. The GMP is determined in the grey market as per the demand and supply of the shares in the primary market. And GMP keeps fluctuating in the grey market till the date of the listing and you can use this as a speculative price around which the share of the company is likely to list.

Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable

As per the various sources, the GMP of Apeejay Surrendra Park Hotels IPO is trading around Rs 50in the grey market. That shows with this GMP and while considering the upper band of the issue price of IPO, that share is going to list at around Rs 205with a premium of around 32% on the bourses.

Apeejay Surrendra Park Hotels IPO Review & Analysis

If you consider the FY23 year-ending net profit of the company, then the earnings per share (EPS) of the company was at Rs 2.75 per share. However, in the last six months of FY24, the EPS stood at Rs 1.31 per share, if considering this rate of EPS for the full year, then the annualized EPS for FY24 would be around Rs 2.62 per share. You can also consider the FY23 or annualizing the six-month EPS of FY24.

And while considering the FY24E full-year EPS of Rs 2.62 and upper price band of Rs 155 Apeejay Surrendra Park Hotels IPO, the share is issued at P/E of around 59, while its listed peers like Indian Hotels Company Limited, Lemon Tree Hotels Ltd, Eih Limited and Chalet Hotels Ltd are trading at P/E of 64.5, 84.3 and 50.5 respectively showing the Apeejay Surrendra Park Hotels IPO is fairly priced.

The share of the Apeejay Surrendra Park Hotels is available at neither too high price nor at a very low price compared to its listed peer group companies. Hence, you can invest or apply in the Apeejay Surrendra Park Hotels IPO only with a medium-term to long-term investment perspective.

How to Apply for Apeejay Surrendra Park Hotels IPO?

It is very simple and trouble-free to apply for the IPO (follow the steps given below) if you choose the best discount brokers in India like Moneysukh. Just open a trading account and demat account here at Moneysukh to apply in the IPOs or trade and invest in the equities, commodities and forex market with one of the best trading platforms offered at the lowest brokerage and trading charges.

Also Read: Features of Best Demat Account with Lowest Brokerage Charges in India

Here you will not only enjoy the advantage of bestonline trading app but also get the opportunity to trade through Algo-trading to earn extra money from high-frequency trading. You will get here the options to choose and trade with the most advanced software and algorithms like AlgoBulls, TradeTron, Keev, Quantman, Trade Radar, and FoxTrader that are integrated best charting system TradingView to facilitate the live market data feeds providing the best trading experience at lowest pricing.

Steps to Apply for Apeejay Surrendra Park Hotels IPO:

Step 1: To apply for Apeejay Surrendra Park Hotels IPO use a computer or smartphone.

Step 2: Now go to the trade.moneysukh.com and log in with your User ID & password.

Step 3: Now find the IPO section and click on the Apeejay Surrendra Park Hotels IPO.

Step 4: Here you have to fill in the required details like price, quantity, and so on.

Note: At the time of applying in any IPO, bid at the cutoff price and then submit your application. 

Step 5:Finally at the time submitting your IPO successfully the desired payment.

How to Check Apeejay Surrendra Park Hotels IPO Allotment Status?

As per the resources, bidding for the Apeejay Surrendra Park Hotels IPO will end on 07 Feb 2024, and the tentative date of basis of allotment is 08 Feb 2024. This means you can check the allotment from 08 Feb 2024 onwards. You can use your PAN card and IPO application details to check the allotment status through various online reliable sources like BSE, NSE and Moneysukh.

Also Read: How to check IPO allotment status on NSE, BSE through Moneysukh

Your chances of getting the allotment of shares are fully dependent on the oversubscription of the IPO. This means if Apeejay Surrendra Park Hotels IPO is oversubscribed many times into the retail category or in the HNI category and you have applied through any of these categories, then the chances of getting the allotment are very low for each individual. However, you can increase your chances of allotment in the IPOs if you follow a few tips and tricks while applying to the IPOs that are likely to be oversubscribed many times.

Also Read: How to improve Allotment chances: 15 Tips for investing in IPO

Owing to oversubscription of IPO, if you have not been allotted any share in the IPO, then the money will be refunded into your bank account. Nevertheless, if you get the allotment of shares in the IPO, then the allocated shares will be transferred into your demat account before the date of listing, which you can either sell in the secondary market or keep for a long-term investment point of view.

Also Read: Benefits of Investing in the Stock Market: Advantages of Share Market

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