Apeejay Surrendra Park Hotels lists with 20% premium over IPO price: Here's what analysts say

The public offer was subscribed 59.66 times.

The stock of Apeejay Surrendra Park Hotels was listed at a 20 percent premium over the issue price on February 12. The shares opened at Rs 186 on the NSE and the BSE against an issue price of Rs 155, broadly in line with analyst estimates who had expected a 20-25 percent premium gain, backed by strong subscription numbers.

The Apeejay Surrendra Park Hotels IPO recorded robust oversubscription, attributed to its strategic timing that positions the company to capitalise on the notable recovery in the hotel sector and the broader post-pandemic economic rebound.

The public offer was subscribed 59.66 times. The quota for Qualified Institutional Buyers (QIBs) garnered 75.14 times subscription while the portion for non-institutional investors was booked 52.41 times. The category for retail individual investors (RIIs) received 30.35 times the subscription.

"After suffering setbacks during the coronavirus pandemic period FY21 and FY22, the company is back on track. Considering its plans, investors may park funds for medium to long-term rewards," Amit Goel, co-founder and chief global strategist at Pace 360. He added that given the fact that a larger chunk of the proceeds will be used to cut its debts, it is expected that Apeejay will further boost its bottom line with lower finance costs. "With its expansion plans afoot, it is poised for bright prospects."

Dhruv Mudaraadi, research analyst at StoxBox, also advises investors who have received allotment to hold shares from a medium to long-term perspective. "The company has built a strong brand presence and credibility within the hospitality industry which is likely to ensure that its valuations are respected over time. With a diversified pan-India portfolio, the company effectively spreads its risk across various geographic regions and market segments, enabling it to capture opportunities in a granular fashion", the analyst added, highlighting factors that bode well for investors.

Prashanth Tapse of Mehta Equities has said: "Given the optimistic momentum in the market and welcoming announcements made in the Interim Budget to promote the hospitality and tourism industry, it is expected that the hotel sector could outperform in coming years and Apeejay Surrendra Park Hotels is well placed in all metros to tap the tourism demand. Hence, we recommend allotted investors to 'hold' with a long-term perspective. For non-allottees, one can accumulate more in dips post listing and look to hold for a long term like a 3-5-year time horizon."

As of September 30, 2023, the company reported a net profit of Rs 22.95 crore and a revenue of Rs 272.31 crore. For the financial year ended March 31, 2023, the company achieved a net profit of Rs 48.06 crore with a revenue of Rs 524.43 crore, a significant improvement compared to a loss of Rs 28.2 crore in the previous year.

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