INITIAL PUBLIC OFFERNING | APEEJAY SURRENDRA PARK HOTELS LIMITED

The ‘APEEJAY SURRENDRA PARK HOTELS LIMITED’ officially issued its Prospectus on January 29, 2024 mentioning the important details regarding its recent Initial Public Offering (hereinafter referred as IPO) which will start from February 5, 2024 and closes on February 7, 2024. In this article we will look at some Important Financial Details of the company and the IPO, which investors need to consider before investing in a right company.

INITIAL PUBLIC OFFERNING | APEEJAY SURRENDRA PARK HOTELS LIMITED

The ‘APEEJAY SURRENDRA PARK HOTELS LIMITED’ officially issued its Prospectus on January 29, 2024 mentioning the important details regarding its recent Initial Public Offering (hereinafter referred as IPO) which will start from February 5, 2024 and closes on February 7, 2024. In this article we will look at some Important Financial Details of the company and the IPO, which investors need to consider before investing in a right company.

ABOUT THE COMPANY

As per the details of the company present on its official website, the company was incorporated in the year 1987 as a private company with the name ‘Budget Hotels Private Limited’ and subsequently, in the year 1990 the company decided to go public and changed its name to ‘Budget Hotels Limited’. Further after the acquisition by ‘Apeejay Hotels Delhi’, the company became the wholly owned subsidiary of the said ‘Apeejay Hotels Delhi’. Further amalgation took place between Apeejay Hotels Delhi, and Gemini Hotels and Holdings Limited (a wholly owned subsidiary of Apeejay Hotels Delhi) and thereafter in the year 2003 the name of the company was changed to ‘Apeejay Surrendra Park Hotels Limited’.

BUSINESS OPERATIONS

With 1,300 rooms spread across upscale and upper mid-scale categories, Apeejay Surrendra Park Hotels Limited is the eighth largest hotel chain in India by asset ownership. Notable brands in its portfolio include "THE PARK," "THE PARK Collection," "Zone by The Park," "Zone Connect by The Park," and the recently introduced "Stop by Zone" economy motel brand. After more than fifty-five years in business, the firm is known for creating personalised experiences under "THE PARK" and "THE PARK Collection," as well as for creating affordable luxury boutique hotels under "Zone by The Park" and "Zone Connect by The Park." Targeting tier 2 and tier 3 cities with contemporary yet regionally influenced designs, they place an emphasis on uniqueness via design, art, events, and entertainment.

INDUSTRY RESEARCH

Offering upmarket and higher mid-scale experiences throughout its portfolio, Apeejay Surrendra Park Hotels Limited is a notable player in India's changing hospitality scene. The organisation takes advantage of strong domestic travel trends and changing visitor tastes towards lifestyle and boutique services, even if India's contribution of global tourism is relatively small. They have profited from the increasing demand for leisure, weddings, and social travel—which is especially noticeable in the post-pandemic recovery phase—by strategically focusing on unique experiences. In addition, the sector's changing ownership structures and the fact that hotels are now recognised as a separate business in a number of states offer both potential and problems for expansion.

COMPETITION

Apeejay Surrendra Park Hotels Limited, with its emphasis on design and unmatched client experiences, carves out a separate position in the premium boutique market in India's highly competitive hospitality scene. The firm uses its distinctive features and strategic locations to gain traction despite fierce competition from both domestic and foreign companies. Even though there are multinational behemoths with vast portfolios and loyalty schemes, Apeejay Surrendra Park Hotels Limited distinguishes itself with well-known brands, devoted customers, and a wide range of food, drink, and entertainment options. Additionally, it has an edge in strengthening its brand and expanding its reach due to its hybrid business strategy, which combines hotel ownership with property management for outside parties. In order to stay ahead in this competitive industry, the corporation also continuously innovates and adapts while being on the lookout for any threats from new competitors.

BOARD OF DIRECTOR AND PROMOTERS OF THE COMPANY

The company’s management includes the following members-

01.  Mrs. Priya Paul as Chairperson and Executive Director of the company.

02.  Mr. Vijay Dewan as Managing Director of the company.

03.  Mr. Karan Paul acting as Non-Executive Director of the company.

04.  Mr. Debanjan Mandal, Suresh Kumar and Mrs. Ragini Chopra acting as Independent Directors of the company.

PROMOTER HOLDING

Mr. Karan Paul, Mrs. Priya Paul are the company's promoters. Further ‘Apeejay Surrendra Trust’ and ‘Great Eastern Stores Private Limited’ are also the promoters of the company. The shareholding of the promoter in the company is mentioned in the given chart

KEY FINANCIAL DETAILS OF THE COMPANY

In the fiscal year 2021-22, the Company has achieved a noteworthy revenue from its operations of Rs. 2,678.30 (in Millions), and generated a revenue of Rs. 5,244.30 (in Millions) till 2022-23. While securing a profit of Rs. 480.62 (in Millions) for the year 2022-23. For the period ending 31 March, 2022 the company has earned a Loss of Rs. (282.02) (in Millions). To make a wise investment choice, we will delve into various Key performance indicators for a comprehensive assessment of the company's financial condition and performance.

DETAILS OF THE IPO

The goal of Apeejay Surrendra Park's book-built IPO is to raise Rs 920.00 crores. It comprises of two parts: an offer to sell Rs 320.00 crores and a new issuance of Rs 600.00 crores. A minimum lot size of 96 shares is required, and the IPO price range is established at ₹147 to ₹155 per share. The required minimum investment for retail investors is ₹14,880. The minimum lot size required of qualified institutional investors (QIIs) is 14 lots (1,344 shares), or ₹208,320. On the other hand, the minimum lot size required of non-institutional investors (NIIs) is 68 lots (6,528 shares), or ₹1,011,840. Some Important details with respect to the Application Size for Qualified Institutional Bidder and Non-Institutional Investor has been Summarised in the following table:

OBJECTIVES OF THE IPO

The objective of the issue of the IPO is for (i) Repayment/ prepayment, in full or in part of certain outstanding borrowings availed by the Company; (ii) meeting the general corporate expenses of the company.

RISKS INVOLVED

‘Apeejay Surrendra Park Hotels Limited’ is exposed to many risks that might affect its financial performance and business operations.

     01.  Lack of Real Estate Development expertise: Taking on the building and development of serviced apartments without any prior expertise exposes the firm to dangers that might cause delays and overspending.

     02.  Financial Covenants Breach: The company's operations, business, and financial status may be negatively impacted by past and future financial covenant breaches, which might result in lenders deeming unpaid debt due and payable.

     03.  Loan Repayment Delays: Although waivers have been used to address past loan repayment delays, there is a chance that these defaults may recur and lenders may decide to impose further restrictions or declare debts due immediately.

     04.  Disputes Over Statutory Dues: These disputes have the potential to negatively effect a company's operations and reputation in addition to resulting in financial fines and an impact on cash flows and the company's financial health.

     05.  Dependency on Online Travel Agents: Depending heavily on online travel agents to make most of the reservations puts the firm at risk of increased commissions or requests for concessions, which might have an adverse effect on margins and overall performance.

ANALYSIS AND RECOMMENDATION

Apeejay Surrendra Park Hotels Limited is a strong investment opportunity in the hospitality industry. The company was founded in 1987 and has a strong history. Some of its brands include "THE PARK" and "Zone by The Park." The firm has positioned itself as a major participant in India's upmarket and higher mid-scale hospitality sector because to its strategic focus on providing personalised experiences and distinctive décor. But a close examination exposes a number of inherent hazards that prospective investors need to be aware of. The absence of real estate development experience inside the firm casts doubts on its capacity to handle the intricacies involved in creating and expanding serviced apartment complexes, which might result in project delays and overspending. Furthermore, prior loan repayment defaults and financial covenant violations point to underlying financial weaknesses that may affect the company's capacity to obtain financing and maintain operational stability. A major dependence on online travel agencies for reservation bookings and disagreements over statutory dues also provide continuous hazards to the business's operations and financial success. Despite Apeejay Surrendra Park Hotels Limited's strong brand recognition and promising growth prospects, these factors underscore the significance of undertaking thorough due diligence before making investment decisions. This ensures that investors are fully aware of the potential risks associated with investing in the company.

IMPORTANT DATES

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