Apeejay Surrendra Park Hotels closes 31% above its issue price on debut

• The stock listed at ₹203 as compared to its issue price of ₹155 per share.
• The grey market was expecting 23% listing gains from the stock.
• Its market capitalisation is at ₹4,341 crore, as per Bombay Stock Exchange.

Hotel chain Apeejay Surrendra Park Hotels debuted on Dalal Street at a 20.6% premium on Monday. It gained during the day and closed 31% ahead of its issue price. The grey market was expecting 23% listing gains from the stock.

The stock closed at ₹203 as compared to its issue price of ₹155 per share. Its market capitalization is at ₹4,341 crore, as per Bombay Stock Exchange.

“We believe the healthy listing is justified on the back of reasonable valuations to peers; and government push towards the hospitality and tourism industry. Its primary objective of reducing debt could lighten interest burden which can improve the bottom lines in coming years,” said Prashanth Tapse, senior VP of research at Mehta Equities. He recommends allotted investors to ‘hold’ the stock with a long-term perspective.

The ₹920 crore public issue was subscribed 63 times over the shares on offer. Ahead of the IPO, it raised ₹409.5 crore from anchor investors including Societe Generale, Troo Capital, Julius Baer India, Citigroup Global, Integrated Core Strategies and more.

While the listing performance of 2024’s market debuts have been mixed, the last two listings like BLS E-Services and Nova Agritech have provided good gains to investors.

Here are the listing gains of the last few market debuts

Company	Listing gains
BLS E-Services	129%
Nova Agritech	39%
EPACK Durable	-10%
Jyoti CNC	30%
Innova Captab	21%

The ₹920 crore issue had a fresh issue of ₹600 crore, and an Offer-for-Sale aggregated to ₹320 crore by selling shareholders. The company proposes to utilize net proceeds from fresh issue towards repayment and or prepayment, in full or in part of certain outstanding borrowings availed by company and balance amount towards general corporate purposes.

Apeejay Surrendra Park Hotels is the eighth largest in India in terms of chain affiliated hotel rooms inventory as of September 30, 2023. They operate hospitality assets under their own brands like The Park, The Park Collection, ‘Zone by The Park’, ‘Zone Connect by The Park’ and ‘Stop by Zone’.

It develops upscale luxury boutiques as well as upper mid-scale hotels. They operate 30 hotels in 20 cities across India. The hotels are operated through direct ownership, long-term leases, operation and management agreements on a contractual basis using their brand on hotels constructed by third parties.

“The company possesses a varied portfolio of hotels across India, including owned, leased, and managed properties strategically situated in both major metropolitan areas and emerging cities,” said an IPO note by Anand Rathi.

They own over 1,300 rooms constituting 2.8% of the total inventory of hotel rooms owned by chained affiliated hotels across the country. The company was established over 55 years ago, with their first hotel The Park at the iconic Park Street in Kolkata.

“The organization has established thriving hospitality brands by combining product innovation and exceptional service, aiming to engage customers with a varied and comprehensive range of offerings. We believe that the valuation of the company is fairly priced and recommend a ‘Subscribe-Long Term’ rating to the IPO,” said Anand Rathi.