Apeejay Surrendra Park IPO – Details, GMP and Review

Apeejay Surrendra Park Limited’s IPO is set to open for subscription on February 5, 2024. The company operates in the hospitality sector in India. While it incurred losses in FY21 and FY22, it became profitable from FY23 onwards. This article will provide details about the Apeejay Surrendra Park IPO, including information about the company, its financials, IPO valuation, Grey Market Premium (GMP), as well as a review and analysis.

Apeejay Surrendra Park IPO Details

IPO Opening Date 05-Feb-24
IPO Closing Date 07-Feb-24
IPO Listing Date 12-Feb-24
Issue Type Book Built Issue IPO
Face Value Rs 1 per equity share
IPO Price band Rs 147 to Rs 155 per equity share
Lot Size 96 Shares
Listing at BSE and NSE
Total Issue Size Rs. 920 Crores
    Fresh issue     Rs. 600 Crores
    OFS     Rs. 320 Crores
Employee Discount Rs.7 Per Share

About Apeejay Surrendra Park Limited

Apeejay Surrendra Park Hotels Limited is engaged in the hospitality business operating under the brand names of “THE PARK”, “THE PARK Collection”, “Zone by The Park”, “Zone Connect by The Park” and “Stop by Zone”.

It is also engaged in the business of retail food and beverage industry through its retail brand ‘Flurys.

As of last financial year end, it operates 80 restaurants, night clubs and bars, offering a wide selection of culinary experiences.

It currently operates 27 hotels that are spread across different categories such as luxury boutique, upscale, and upper midscale and are present in Kolkata, New Delhi, Chennai, Hyderabad, Bangalore, Mumbai, Coimbatore, Indore, Goa, Jaipur, Jodhpur, Jammu, Navi Mumbai, Visakhapatnam, Port Blair, and Pathankot.

It owns restaurants under the brand name of Zen, Lotus, Aish, Saffron, Fire, Italia, 601, The Bridge, The Street, Verandah, Vista, Bamboo Bay, Monsoon, Mist, Love and Bazaar.

Apeejay Surrendra Park IPO Details, GMP, Review

Apeejay Surrendra Park Limited Financial Summary

Period Ended 31-Mar-21 31-Mar-22 31-Mar-23 30-Sep-23
Assets 1,280.34 1,275.18 1,361.79 1,382.51
Revenue 190.29 267.83 524.43 272.31
Profit After Tax -75.88 -28.20 48.06 22.95
Net Worth 536.28 508.51 555.68 578.71
Reserves and Surplus 518.81 491.05 538.22 561.24
Total Borrowing 593.44 622.68 566.88 597.09

Apeejay Surrendra Park IPO Valuation

  • The IPO price band is set at Rs 147 to 155 per share.
  • Considering the last 3 years’ weighted EPS of Rs 0.12, the resulting P/E ratio is a high 1292x due to losses incurred in 2 out of the last 3 financial years, indicating a very low weighted EPS.
  • With the FY23 EPS at Rs 2.75, the P/E ratio stands at 56x.
  • When annualizing the 6 months ending in Sep-23 EPS, the P/E ratio comes to 59x.
  • Comparatively, listed peers such as Lemon Tree Hotels trade at a highest P/E of 92x, while EIH Limited trades at a lowest P/E of 56x, with an industry average P/E of 74x. Therefore, the IPO’s price band, at a P/E of 56x to 59x (excluding FY21 and FY22 losses), is considered fully priced.

Apeejay Surrendra Park IPO GMP (Grey Market Premium)

According to IPO Watch, the Grey Market Premium (GMP) for Apeejay Surrendra Park Hotels IPO stands at Rs 25.

Data from Investorgain indicates a fluctuation in the GMP, rising from Rs 25 to Rs 44 between January 31st and February 1st, 2024.

Apeejay Surrendra Park IPO – Positive Aspects

  • The company has established successful hospitality brands through product innovation and service excellence, attracting customers through a diverse and holistic offering.
  • It maintains a diversified Pan-India portfolio of owned, leased, and managed hotels strategically located across metros and emerging cities.
  • The company boasts a high occupancy rate and REVPAR (Revenue per Available Room) along with a strong financial and operational track record.
  • Its high contributions from Food & Beverage (F&B) and Entertainment sectors add to stable and non-cyclical earnings, complementing the core hotel business.

Apeejay Surrendra Park IPO – Risk Factors

  • The IPO includes both Offer for Sale (OFS) and fresh issue components. OFS proceeds would go to selling shareholders, not the company.
  • Risks involve delays in hotel property and land development, potentially affecting business, operations, and finances.
  • Construction risks associated with serviced apartments at EM Bypass, a project without prior company experience.
  • Historical non-compliance with financing agreement covenants and delays in loan repayments could adversely impact business.
  • Delays or disputes in statutory dues payments may attract financial penalties, impacting financial condition and cash flows.
  • Majority of hotel bookings originate from online travel agents; market share gains by intermediaries could affect business terms.
  • Past restated losses pose risks to future financial conditions.
  • Significant room revenue comes from corporate and leisure customers; changes in travel preferences could impact demand and financials.
  • Investors should go through all risk factors indicated in IPO RHP

Apeejay Surrendra Park IPO Review and Conclusion

  • 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.
  • On the flip side, the IPO is fully priced, and risks include delays in property development, compliance issues, dependence on online travel agents, and past restated losses.

Investors who understand all the risk factors can invest in this IPO.

Suresh KP

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