Apeejay Surrendra Park shares to make market debut today; grey market premium hints at 25% listing gain

Apeejay Surrendra Park shares to make market debut today; grey market premium hints at 25% listing gain

Shares of Apeejay Surrendra Park Ltd, the 8th largest hotel chain, will list on bourses on Monday and if one goes by the grey market trends, the stock was commanding a grey market premium of Rs 38 over the issue price of Rs 155 per share, hinting at a listing pop of 25 per cent. The stock listing is likely at around Rs 190-195, as per grey market quotes.

The IPO, which ran from February 5 to February 7, was subscribed a total 62.91 times. The quota reserved for qualified institutional buyers (QIBs) was subscribed 79.23 times, followed by the non-institutional investor quota (55.26 times) and retail quota (32 times). The portion reserved for employees was subscribed 5.73 times. The Rs 920-crore issue was sold in the price band of Rs 147-Rs 155 per share. Eligible employees of the company were offered a discount of Rs 7 per share.

“While the return on equity turned positive in FY23, the return on assets remains relatively modest, owing to the capital-intensive nature of the hotel industry. The valuation, although reasonable compared to 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 debt reduction and its unique blend of hotel and F&B services, position it favourably for sustainable growth and market leadership,” StoxBox said in its preview note.

Apeejay Surrendra Park operates 30 hotels, which are spread across different categories such as luxury boutique upscale, and upper midscale in cities such as Mumbai, Bangalore, New Delhi, Hyderabad, Chennai  and Goa. It offered 2,298 rooms as of January 2024. Apeejay Surrendra Park is also engaged in retail food and beverage industry through 73 ‘Flurys’ outlets.

“Apeejay’s share of revenue from the F&B segment has been historically high for the company relative to its peers. We believe the asset light model, repayment of debt, strong industry tailwinds, and development of new owned and managed properties with improved operational efficiency to achieve superior performance,” Reliance Securities said.

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