Apeejay Surrendra Park Hotels IPO booked 1.5x in three hours; retail portion books 3.33 times

The initial public offering (IPO) of Apeejay Surrendra Park Hotels received a strong response from the investors during the first day of the bidding process, across all categories of investors. The issue was fully subscribed during the first few hours of the bidding process on day one.

The Kolkata-based Apeejay Surrendra Park is selling its shares in the price band of Rs 147-155 apiece with a lot size of 96 shares and its multiples thereafter. The Rs 920-crore issue includes a fresh share sale of Rs 600 crore and offer-for-sale shares worth Rs 320 crore.

According to the data, the investors made bids for 5,31,78,336 equity shares, or 1.53 times, compared to the 3,47,61,903 equity shares offered for the subscription by 13.25 pm on Monday, February 5. The bidding for the issue will continue for three days and conclude on February 7, Wednesday.

The allocation for retail investors was subscribed 3.33 times, while the portion reserved for non-institutional investors saw a subscription of 1.18 times. However, the quota set aside for qualified institutional bidders (QIBs) attracted bids for 1.15 times and the portion reserved for BLS International shareholders was booked only 41 per cent times as of the same time.

Also read: Apeejay Surrendra Park Hotels IPO opens today: Should you subscribe to the issue?

Incorporated in 1987, Apeejay Surrendra Park Hotels 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'. The company is also engaged in the business of retail food and beverage industry through its retail brand 'Flurys'.

Brokerage firms are mostly positive on the issue and suggest to subscribe to the issue citing its sound management, efficient track record, expansion plans, asset light model and rise in the travel. However, higher operational capital, delayed plans and payments and other regulatory issues are key risks to the company.

In a bid to enhance operational efficiency, the company is implementing holistic  management plans for its hotels. This involves streamlining sourcing costs,  leveraging technology for workforce management, and implementing energyefficient practices, said Ventura Securities.

To embrace their asset light business model, the company plans to expand its portfolio through operation  and management agreements, as well as lease or license deeds, particularly for  properties under the "Zone by The Park" and "Zone Connect by The Park" brands, it added with a 'subscribe' rating.

Ahead of its IPO, Apeejay Surrendra Park Hotels raised Rs 409.5 crore from anchor investors as it issued over 2.64 crore equity shares at an issue price of Rs 155 apiece. The company has reserved 75 per cent of the offer to qualified institutional bidders (QIBs), with non-institutional investors receiving 15 per cent, and the remaining 10 per cent allocated to retail investors.

The hospitality sector in India consists of hotels offering rooms to tourists and business travelers, as  well as restaurants, bars, and banquet facilities for events. India's hospitality industry is expected to  grow rapidly, with an overall supply CAGR of 8.6% from September 2023 to FY 2027, said SMC Global's IPO note.

Apeejay Surrendra Park has carved a unique  space in the hospitality industry. Leading the segment with impressive occupancy rates, the company  consistently outperforms competitors. A significant portion of its earnings will be directed towards  debt reduction, leading to a healthier bottom line and lower financing costs, said added while giving its 2.5 stars out of 5.

ICICI Securities, JM Financialand Axis Capital are the book running lead managers of the Apeejay Surrendra Park IPO, while Link Intime India is the registrar for the issue. Shares of the company are likely to debut on both BSE and NSE with Monday, February 12 as the tentative date of listing.

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