Apeejay Surrendra Park Hotels made a remarkable entry onto Dalal Street, surpassing market expectations with a 21% premium listing on the BSE at ₹187 and ₹186 on the NSE, against the IPO price of ₹155. Market analysts had anticipated this bullish debut, projecting a premium ranging between ₹185 and ₹195, reflecting the robust demand for the company’s shares.
Fueling this optimism are the favorable market conditions and supportive government initiatives, particularly evident in the Interim Budget’s measures aimed at boosting the hospitality and tourism industry.
Prashanth Tapse of Mehta Equities attributes the strong subscription demand for Park Hotels’ IPO to these factors, projecting a sustained upward trajectory in the stock’s performance.
Tapse underscores the company’s reasonable valuations vis-à-vis its peers and the government’s focus on reducing debt, which bodes well for improved profitability in the future.
Echoing this sentiment, Dhruv Mudaraadi of StoxBox anticipates a premium listing of approximately 25%, citing the strategic positioning of the company to leverage the industry’s resurgence and post-pandemic economic recovery.
The gray market premium (GMP), indicative of investor sentiment, had already signaled a 25% premium ahead of the IPO debut. This enthusiasm translated into a subscription frenzy, with the issue oversubscribed nearly 60 times, underlining investor confidence across all categories.
The IPO, which raised ₹920 crore, comprised a fresh issue of ₹600 crore and an offer for sale worth ₹320 crore by promoters and investors. The proceeds, primarily earmarked for debt repayment, signify a strategic move towards bolstering the company’s financial position.
Apeejay Surendra Park Hotels, positioned as the eighth largest hotel chain in India by affiliated room inventory, reported robust financials, with a net profit of ₹22.95 crore and revenue of ₹272.31 crore for the period ending September 30, 2023. The company’s prudent financial management is evident in its efforts to reduce outstanding borrowings, which stood at ₹582.28 crore as of January 2, 2024.
Apeejay Surrendra Park Hotels’ IPO debut not only exceeded market expectations but also underscores the bullish sentiment surrounding the hospitality sector. With a strategic allocation of funds and a solid financial foundation, the company is poised for sustained growth, making it an attractive proposition for investors eyeing long-term value in the burgeoning hospitality industry.