Apeejay Surrendra Park Hotels IPO plans to raise Rs 920 crores. The issue is a combination of fresh issue of Rs 600.00 crores and offer for sale of Rs 320.00 crores. Apeejay Surrendra Park Hotels Limited (ASPHL) is the 8th largest hotel chain amongst hotel chains with asset ownership in India. ASPHL operates under five brands – THE Park, THE Park Collection, Zone by The Park, Zone Connect by The Park and Stop by Zone.

About Apeejay Surrendra Park Hotels:

• The first hotel in THE Park Hotel group opened on 1st November 1967 with 149 rooms on the fashionable Park Street in Kolkata.
• Apeejay Surrendra Park Hotels Limited (“Park Hotels”) was incorporated on November 27, 1987. 
• Among hotel chains with asset ownership, the Company ranks as the eighth largest in India in terms of chain affiliated hotel rooms inventory as of September 30, 2023 . They operate hospitality assets under our own brands, “THE PARK”, “THE PARK Collection”, “Zone by The Park”, “Zone Connect by The Park” and “Stop by Zone”. spread across different categories such as luxury boutique, upscale, and upper midscale in cities like, New Delhi, Chennai, Hyderabad, Kolkata, Bangalore, Mumbai, Coimbatore, Indore, Goa, Jaipur, Jodhpur, Jammu, Navi Mumbai, Visakhapatnam, Port Blair, and Pathankot, offering a total of 2,111 rooms as of August 2023.
• They operate 30 hotels comprising 7 owned, 3 leased, and 20 managed hotels across luxury boutique upscale brands, and upper midscale category. We have established presence in the retail food and beverage industry through our retail brand ‘Flurys’.
• The company also operates 80 restaurants, night clubs and bars, offering a wide selection of culinary experiences as of March 31, 2023. The company 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.

• The company classifies (a) “THE PARK” and “THE PARK Collection” brands under the upscale category, and (b) “Zone by The Park”, and “Zone Connect by The Park” under upper mid-scale category.
• Park Hotels has established presence in the retail food and beverage industry through their retail brand ‘Flurys’. They have pioneered the concept of luxury boutique hotels in India under their brand, “THE PARK”, extending it further through and “THE PARK Collection”, and in upper-midscale categories with their brands “Zone by The Park” and “Zone Connect by The Park”.

Apeejay Surrendra Park Hotels: Financials

Anchor: Apeejay Surrendra Park Hotels IPO

Apeejay Surrendra Park Hotels Ltd. has raised Rs 409.5 crore from anchor investors, ahead of its initial public offering. The company allotted 2.64 crore shares at Rs 155 apiece to 37 anchor investors. Nippon Life India , HDFC Life Insurance Co., CLSA Global , 360 One AMC and Franklin India are among the top investors Eight domestic mutual funds have applied through a total of 21 schemes, and have collectively netted 49.82% of the anchor portion of Rs 204 crore.

Apeejay Surrendra Park Hotels IPO: Salient Points

• Promoters holding will come down from 94% TO 68%.
• The selling shareholders include Apeejay Pvt Ltd (Rs 296 crore), RECP IV Park Hotel Investors (Rs 23 crore) and RECP IV Park Hotel Co-Investors (Rs 1 crore).
• Established in 1910, Apeejay Surrendra Group employs over 43000 people in rapidly expanding operations in Tea, Hospitality, Shipping, Retail & Real Estate and has diversified into new business initiatives like, Marine Cluster, Logistics and Knowledge Parks.
•  After suffering setback during COVID, Company is back on track.
  •    The net proceeds from the fresh issue will go towards:

• This clearance of its debts will reduce finance cost and lead to improved earnings. 
• As on the date of this Red Herring Prospectus its hotel development pipeline consists of expansion of two of our existing owned hotels in Visakhapatnam and Navi Mumbai, and development of our embedded land bank at Pune, aggregating to 380 rooms.
• For future development plans, it intends to utilise the land bank for construction of a new hotel at Jaipur and also use its land bank of 3.36 acres to construct a hotel and serviced apartments at Kolkata.
• ICRA Limited, pursuant to its report dated April 6, 2023, has upgraded the long-term rating for term loan and fund-based limits to [ICRA] [BBB+] (Stable) from [ICRA] [BBB] (stable), and has upgraded its short-term rating for fund- based limits and non-fund based limited to [ICRA] [A2] from [ICRA][A3+].

• High occupancy rate and REVPAR with a strong financial and operational track record;
• The company has been a pioneer in introducing the concept of luxury boutique hotels in India through its brand ‘The Park’.

• Peers

•  Apeejay Surrendra Park Hotels has created a niche place in hospitality industry with over 5 decades of presence. 
• Built successful hospitality brands through product innovation and service excellence to attract customer through a diversified and holistic offering;
• It has a diversified Pan India portfolio of owned, leased and managed hotels that are strategically located across metros and emerging cities;
• High F&B and Entertainment contributions lend a stable and non-cyclical earnings and thus complement the hotel business;
• Their “Flurys” has emerged as an iconic brand with a successful and profitable track record of industry leading EBITDA margins;
• Apeejay Surrendra Park Hotels IPO is coming at a PE ratio of 68.8x (fy23 earnings) and 72.1x (fy24 annualized earnings.
• I intend to apply in Apeejay Surrendra Park Hotels IPO. It has a diversified pan India portfolio of owned, leased and managed hotels with High occupancy rate and Revenue.
• GMP as heard on Social Media may be around Rs. 60.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.