Apeejay Surrendra Park Hotels (ASPHL) made a strong debut in the stock market on Monday, with its shares trading at Rs 187, a 21 per cent premium over its issue price of Rs 155 per share on the BSE in a market for the rest depressed.
The stock opened at Rs 186 on the National Stock Exchange (NSE). The company is engaged in the hospitality business and manages hotels under its brand “The Park”.
“The company benefits from decades of experience in the hospitality industry, reflected in high occupancy rates and a proven track record of service excellence. Its expansion plans indicate exciting possibilities for future revenue growth. This quote paints a hopeful picture for ASPHL, but a cautious picture. This approach is still recommended. Therefore, those who want to book profits can exit their holdings, and those who want to hold them for the long term can keep a stop loss at Rs 168 “said Shivani Nyati, head of wealth at Swastika Investmart Ltd.
The IPO received a strong response and the issue garnered 62.91 subscriptions. While the portion of qualified institutional buyers was subscribed 79.23 times, the portion of non-institutional investors was subscribed 55.26 times. The retail portion also had excellent participation and was subscribed 32 times.
As of September 30, 2023, 81 restaurants, nightclubs and bars were operating, offering a wide selection of culinary experiences. The nightclub and entertainment division contributes to your brand positioning and allows for cross-selling opportunities. The company also operates a premium retail chain in the food and beverage business under the brand name ‘Flurys’, which has a successful and profitable track record of industry-leading earnings before interest, taxes, depreciation and amortization (ebidta) margins.
ASPHL is a well-established player in the Indian hospitality industry with a portfolio of 30 hotels spread across attractive locations in key geographies of India, has a strong operating track record of high occupancy, competitive average room rates and revenue per available room ( RevPAR). For its properties, its share of food and beverage (F&B) segment revenue has historically been high for the company compared to its peers.
Analysts at Reliance Securities believe that the asset-light model, debt repayment, strong industry tailwinds and development of new owned and managed properties with improved operational efficiency will help achieve outperformance.
India’s GDP per capita is expected to rise from $2,238 in FY22 to $3,985 in FY29, and rising individual incomes are expected to create additional discretionary spending that will keep demand levels at more than 11 percent and a strong recovery in tourism in the coming years. will drive superlative growth for the industry, the brokerage firm said in an IPO note.
“ASPHL has demonstrated solid revenue growth, with sales nearly tripling over the past three years. This turnaround is notable, considering the company’s transition from losses to profitability, reflected in the strong increase in net profit in the FY23. While return on equity turned positive in FY23, return on assets remains relatively modest, due to the capital-intensive nature of the hospitality industry. The valuation, although reasonable compared to its peers, reflects market optimism in the relatively high P/E ratio, which stands at 56.4 times based on FY23 EPS. Looking ahead, ASPH’s strategic initiatives, including reducing debt and its unique combination of hospitality and food and beverage services, position it favorably for sustainable growth and market leadership,” brokerage firm BP Equities said in an IPO note.
First published: February 12, 2024 | 10:16 am IS