Apeejay Surrendra Park Hotels Limited IPO 

Last Updated on October 10, 2023 by BFSLTeam BFSLTeam

If you’ve always wanted to invest in the hospitality sector, here’s your chance. Apeejay Surrendra Park Hotels has filed its papers for an initial public offering. According to a Horwath HTL Report, Apeejay Surrendra Park Hotels Limited is one of the largest hotel chains with respect to asset ownership in India.

This Business Empire operates hospitality assets under the following brands—The Park Collection, The Park, Zone by the Park, Stop by Zone, and Zone Connect by The Park. The company wants to raise funds by launching the 2nd largest IPO by a hotel in India.

But before you invest in Apeejay Surrendra Park Hotels IPO, it’s advisable to check the details of this business empire and its strengths and risks. Go through this blog. 

Also Read: How To Apply For An IPO?

About the Company 

Apeejay Surrendra Group is one of India’s oldest and most reputable business conglomerates. The group has businesses in hospitality, tea (FMCG products and plantations), real estate (business and commercial centres), shipping, retail brands (tea rooms and bookstores), knowledge parks, marine clusters, and logistics parks. 

Apeejay Surrendra Business Group started its journey as a small workshop for manufacturing steel goods for the domestic market. The unit was set up as the founders were greatly moved by Mahatma Gandhi’s clarion call for self-reliance. Gradually, this business group ventured into hotels, real estate, construction and pharmaceuticals. 

The Park located in Park Street of Calcutta was the conglomerate’s first hotel. After its grand success, The Park was opened in most of the major cities of India. Today, it is a preferred destination for both tourists and corporate travellers. 

Apeejay Surrendra Park Hotels is the company behind the Park Group of Hotels. It is the eighth largest hotel chain in India based on asset ownership with 27 hotels and 2,111 rooms in strategic locations around the country. Some of the major cities where The Park is located include Kolkata, New Delhi, Bangalore, Visakhapatnam, Hyderabad, and Chennai. 

Other than hotels, Apeejay Surrendra Park Hotels operates 80 restaurants, bars and nightclubs under the brands- Flurys, Tantra, Someplace Else, Roxy, The Leather Bar, Zen, Pasha, Someplace Else and more.

IPO Objectives and Details 

Apeejay Surrendra Park Hotels has recently submitted its Draft Red Herring Prospectus with SEBI. It aims to raise Rs. 1,050 crore through an Initial Public Offering. It comprises a fresh issue of shares worth Rs. 650 crore. It also comprises an OFS (Offer for Sale) of equity shares worth Rs. 400 crore by investor shareholders and promoters.

The OFS comprises shares totalling up to Rs. 80 crore from Apeejay Surrendra Trust, Rs. 23 crore from RECP IV Park Hotel Investors, and Rs 296 crore from Apeejay Private Limited. The company will not make any profits from its OFS.

As per the information in its DRHP, Park Hotels is going to use funds acquired from its IPO to repay several loans and for general corporate purposes. It had filed its draft papers in 2019 to launch its IPO. But, its plans got stalled as the world was grappled by the Covid-19 pandemic. 

Additional Read: Lohia Corp Ltd IPO

Strengths 

You must check the following strengths of Apeejay Surrendra Park Hotels before investing in its IPO: 

• The conglomerate has built a hospitality brand successfully through service excellence and product innovation. It has used a holistic product offering to attract a diverse range of customers. 
• The pan-India presence of owned, leased, and managed Park Hotels has contributed to a rising brand recall value. Moreover, The Park is strategically located across emerging urban centres in India which has contributed to its growth. 
• A high occupancy rate backed by a strong financial performance over several years has contributed to the growth of Apeejay Surrendra Park Hotels. 
• The company’s revenue from food and beverages and entertainment is a stable source of non-cyclical earnings which complements its hotel business well. 
• A successful and iconic brand ‘Flurys’ comes with a profitable track record and industry-leading EBITDA margins. 
• The leadership team of Apeejay Surrendra Park Hotels is dedicated and experienced and maintains a high standard of corporate governance. 

Risks Involved 

Check the risks involved with investing in Apeejay Surrendra Park Hotels IPO: 

• If there’s a delay in the construction of new hotel buildings or expansion of existing hotels, it would have an adverse impact on the entire business of Apeejay Surrendra Group.
• The business remains open to risks associated with the development and construction of serviced apartments at EM Bypass. If there’s a delay in the construction of these residential projects, there might be an adverse effect on the company. 
• The top five owned hotels contribute the most revenue from the hotel segment. If any negative development affects these hotels, there might be a negative impact on its entire business, cash flow and revenue from operations.

Also Read: Risk of investing in IPO

Summary 

Apeejay Surrendra Park Hotels is a reputed hotel chain, strategically located in major cities of India. It has filed its DRHP with SEBI to launch its IPO. It aims to repay its debt and fund other requirements with the funds received. 

But, before you put your money in this IPO, you must check the strengths and risks involved with this company. Moreover, to get up-to-date information, keep an eye on our website. 

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