Apeejay Surrendra Park Hotels Limited IPO: Apeejay Surrendra Park Hotels Limited (ASPHL) is a leading Indian hospitality chain, operating luxury and mid-market hotels, resorts, and convention centers across India. Established in 1971, they boast a rich legacy with brands like The Park, Park Exotica, The Fern, and Beacon Hotels. The Indian hotel industry is expected to witness significant growth in the coming years driven by strong domestic travel and a flourishing tourism sector.
Apeejay Surrendra Park Hotels Limited IPO Details:
- IPO Dates: Yet to be announced. The Draft Red Herring Prospectus (DRHP) has been submitted to SEBI, but the open/close and listing dates are pending approval.
- Offer Size: ASPHL aims to raise Rs. 1,050 crore through the IPO. This comprises a fresh issue of shares worth Rs. 650 crore and an Offer for Sale (OFS) of Rs. 400 crore from existing investors and promoters.
- Price Band: Not yet revealed. The price band will be determined during the book-building process.
Recent News Updates:
- The DRHP filing with SEBI marks the official step towards the IPO launch.
- The hospitality industry, especially in the luxury segment, has shown strong recovery post-pandemic, which could positively impact investor sentiment.
Offer Details:
Securities Offered:
The Apeejay Surrendra Park Hotels Limited IPO will offer only equity shares. There will be no bonds or other types of securities involved.
Investor Category Reservation:
- Retail Individual Investors (RIIs): 35% of the net offer (excluding the employee reservation portion).
- Qualified Institutional Buyers (QIBs): 50% of the net offer.
- Non-Institutional Investors (NIIs): 15% of the net offer.
Employee Reservation:
Up to 5% of the post-offer paid-up equity share capital of the company may be reserved for eligible employees.
Minimum Lot Size and Investment Amount:
The minimum lot size is yet to be confirmed, but it will likely be in the range of 100-200 shares.
Estimated Investment Amount:
With the price band unknown at this stage, it’s difficult to estimate the exact investment amount for a minimum lot. However, based on previous hospitality IPOs and the offer size, the minimum investment could fall within the range of Rs. 10,000 – Rs. 20,000.
Company profile:
A Journey of Excellence:
- Founded in 1971, Apeejay Surrendra Park Hotels Limited (ASPHL) boasts a rich 50-year history in the Indian hospitality industry.
- Starting with The Park in Kolkata, a pioneering luxury boutique hotel, they’ve grown into a diverse chain with a presence across India.
- Today, ASPHL operates five distinct brands catering to various segments:
- The Park: High-end luxury hotels for discerning travelers.
- The Park Collection: Upscale boutique hotels with personalized service.
- Zone by The Park: Stylish and contemporary mid-market hotels.
- Zone Connect by The Park: Affordable and efficient business hotels.
- Stop by Zone: Budget-friendly hotels for value-conscious travelers.
Market Position and Footprint:
- ASPHL ranks among the top 10 hotel chains in India by asset ownership and operates over 70 hotels and resorts across 28 cities.
- Their market share in the luxury segment is significant, with The Park being a renowned brand associated with exclusivity and refined experiences.
Key Milestones and Achievements:
- Opening of The Park in Kolkata in 1967, marking the birth of India’s first luxury boutique hotel.
- Bagging prestigious awards like “Best Luxury Hotel Brand India” and “World’s Leading Boutique Hotel Brand” by World Travel Awards.
- Successful acquisition and integration of The Fern Hotels & Resorts in 2015, expanding their brand reach and market share.
- Strong financial performance with consistent revenue growth and profitability.
Competitive Advantages and USP:
- Legacy and Brand Recognition: ASPHL’s long-standing reputation and established brands like The Park give them a distinct edge in the market.
- Diverse Portfolio: Catering to various segments with their varied brands allows them to tap into a wider customer base.
- Focus on Innovation and Design: Their hotels are known for their contemporary design aesthetics and unique experiences, setting them apart from competitors.
- Operational Excellence: Strong operational efficiency and a commitment to guest satisfaction contribute to their success.
Financials:
| Particulars | Year ending on March 31, 2023 | Year ending on March 31, 2022 | Year ending on March 31, 2021 |
|---|---|---|---|
| Total Income | 5,244.30 | 2,678.30 | 1,322.68 |
| Profit After Tax (PAT) | 480.62 | 282.02 | 758.84 |
| Total Borrowings | 5,668.80 | 6,226.79 | 5,012.11 |
| Cash & Cash Equivalents | 165.70 | 85.40 | 88.72 |
Note: Amount in ₹ Million.
IPO Objectives:
Rationale for Going Public:
Apeejay Surrendra Park Hotels Limited (ASPHL) has cited several key reasons for its upcoming IPO:
- Raise capital for growth: The primary objective is to raise Rs. 1,050 crore, with Rs. 650 crore being fresh issue and Rs. 400 crore an Offer for Sale (OFS) by existing investors and promoters. This capital will be used to fuel ASPHL’s ambitious expansion plans.
- Enhance brand visibility and market confidence: Listing on the stock exchange will boost the company’s brand image and credibility, potentially attracting wider investor interest and strengthening its position in the Indian hospitality market.
- Improve liquidity and facilitate future fundraising: Publicly traded shares provide greater liquidity for investors and pave the way for easier access to capital in the future, supporting further growth initiatives.
- Employee motivation and retention: Offering employee stock ownership plans (ESOPs) through the IPO can incentivize and retain key talent, further contributing to the company’s success.
Fund Utilization Plans:
ASPHL intends to utilize the raised funds in the following ways:
- Debt repayment and prepayment: A portion of the funds will be used to reduce outstanding debt, lowering interest burden and improving financial flexibility.
- Expansion and renovation: ASPHL plans to add new hotels and resorts, particularly in underpenetrated markets, and upgrade existing properties to maintain their competitive edge.
- Brand acquisition and strategic partnerships: The company might explore potential acquisitions or partnerships to strengthen its brand portfolio and geographical reach.
- General corporate purposes: A portion of the funds will be kept for working capital needs and unforeseen expenses.
Potential Risks:
Industry Headwinds:
- The Indian hospitality industry, while promising, is still recovering from the pandemic’s impact.
- Rising inflation and potential economic slowdown could lead to reduced travel spending and impact hotel occupancy rates, affecting ASPHL’s revenue and profitability.
- Increased competition from established players and new entrants could intensify market pressure on margins and market share.
Company-Specific Challenges:
- High Debt Levels: While ASPHL plans to utilize part of the IPO proceeds for debt repayment, its current debt-to-equity ratio remains relatively high. This raises concerns about financial stability and future borrowing capacity.
- Dependence on Key Locations and Brands: ASPHL’s revenue is concentrated in certain cities and relies heavily on its established brands like The Park. This dependence on specific markets and brand performance leaves them vulnerable to regional economic fluctuations or brand reputation issues.
- Execution Risk: Successfully implementing the intended expansion plans and achieving projected growth targets relies on efficient execution, which presents operational and financial challenges.
Financial Health Analysis:
- Profitability: While showing profitability, ASPHL’s PAT has declined compared to 2021.
- Revenue Growth: The company has exhibited consistent revenue growth, but the rate of growth needs further analysis to assess future sustainability.
- Cash Flow: Analyzing the company’s cash flow statement would provide insights into its liquidity and ability to meet financial obligations.
Apeejay Surrendra Park Hotels Limited DRHP
Also Read: How to Apply for an IPO?
