Apeejay Surrendra Park Hotels Limited IPO 2024: Overview, Price, Dates, and Financial Analysis

Apeejay Surrendra Park Hotels Limited, the entity behind The Park Group of Hotels, stands as the eighth-largest hotel chain in India, boasting 27 hotels with 2,111 rooms in strategic locations. In addition to hotels, the company operates 80 restaurants, bars, and nightclubs, including renowned brands like Flurys, Tantra, and Someplace Else. The company owns popular restaurant brands like Zen, Lotus, and Aish, employing 1,923 people as of June 2023.

Apeejay Surrendra Park Hotels Limited IPO is scheduled to be open for subscription from February 5, 2024, to February 7, 2024. Priced at Rs. 147 - Rs. 155 per share, the total issue size is Rs. 920.00 CR, with a 75% reservation for institutional investors, 15% for non-institutional investors, and 10% for retail investors. The IPO timetable includes the listing date of February 12, 2024.

As of September 30, 2023, the company showcased improved financials in FY 23, with increased total assets, higher revenue, and positive profits. Revenue distribution by segments in FY 23 indicated that 55.30% came from online travel agents, 2.58% from bookings through their website, 36.62% from walk-ins and direct bookings, and 5.51% from airline crew. The revenue distribution segment-wise excluded quarantine and medical bookings compared to FY 22.

The IPO's objectives include repayment/prepayment of certain outstanding borrowings and general corporate purposes. Promoters, including Karan Paul, Priya Paul, Apeejay Surrendra Trust, and Great Eastern Stores Private Limited, hold 94.18% pre-issue promoter shareholding, which reduces to 68.13% post-issue.

JM Financial Limited, ICICI Securities Limited, and Axis Capital Limited are the lead managers for the IPO. Apeejay Surrendra Park Hotels Limited's IPO demonstrates a competitive P/E ratio and positive EPS compared to its peers.

The evaluation of the P/E ratio suggests that the IPO's price range, with a P/E ratio of 56.36x, seems undervalued compared to the industry average of 73.60x. While the company has yet to pay dividends in past fiscal years, its strengths include a focus on developing existing land, strategic capital allocation for growth, a diversified portfolio with hotels across India in key locations, and increased occupancy rates.

However, potential weaknesses such as seasonal and cyclical activities impacting operating results, 75% of revenue coming from the top 5 hotels, and revenue dependence on corporate and leisure customers could affect demand for hotel rooms. As of today, the Grey Market Premium (GMP) for Apeejay Surrendra Park Hotels Limited IPO is Rs. 70.

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