Friday, February 23, 2024

IPO: Gray market premium of this IPO reached 45%, is it a good opportunity to invest?

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Apeejay Surrendra Park Hotels IPO Open: Apeejay Surrendra Park Hotels, the parent company of The Park brand. The IPO (IPO 2024) has opened for investment today on 5 February 2024. The size of the IPO is Rs 920 crore. In this issue, a total of fresh shares worth Rs 600 crore will be issued and shares worth Rs 320 crore will be sold through offer for sale. The company has fixed the price band for the IPO from Rs 147 to Rs 155 per share. Investors can bid in this till 7th February. Listing of shares will take place on BSE and NSE on 12 February.

What is the situation in the gray market?

There is a stir in the gray market regarding APJ Surendra Park Hotels. The unlisted stock of the company is at a premium of Rs 70. The upper price band can give 45 percent return on share listing at Rs 155.

Anand Rathi: Subscribe for long term

Brokerage house Anand Rathi has given subscribe rating to the IPO of APJ Surendra Park Hotels. The brokerage says the organization has built thriving hospitality brands through a combination of product innovation and exceptional service, aiming to engage customers with diversified and comprehensive offerings. The brokerage believes that the valuation of the company is fair and it can be subscribed for long term. The brokerage says that the company has a diversified portfolio of hotels across the country. At the upper price band, the company is at a P/E valuation of 68.8 times its FY 2023 earnings.

Choice Broking: Subscribe with caution

According to brokerage house Choice Broking, at the higher price band, the company is demanding a P/E multiple of 63.1 times, which is in line with the Pierce average of 64.4 times. Choice Broking says the issue is fully priced. However, considering the positive macro conditions for the hospitality sector, the brokerage has advised to subscribe to the issue with caution.

StoxBox: Subscribe

Brokerage house StoxBox says that while return on equity turned positive in FY23, return on assets remains relatively modest due to the capital-incentive nature of the hotel industry. The brokerage says valuations, although fair compared to peers, reflect market optimism in the relatively high P/E ratio, which stands at 56.4x based on FY23 EPS.

Looking ahead, Apeejay Surendra Park’s strategic initiatives, including debt reduction and unique mix of hotel and F&B services, position it optimally for stable growth and market leadership. The brokerage has given ‘Subscribe’ rating on this issue.

minimum investment amount

The company is offering shares to its employees at a discount of Rs 7 per share. Retail investors can bid for a minimum lot size i.e. at least 96 shares. Bidding can be done on a maximum of 13 lots i.e. 1248 shares. In such a situation, bids can be made ranging from Rs 14,880 to Rs 1,93,440. During this, promoter APJ will sell shares worth Rs 296 crore in the OFS, while investors RECP IV Park Hotel Investors and RECP IV Park Hotel Co-Investors will sell shares worth Rs 23 crore and Rs 1 crore respectively.

How many shares reserved for whom?

In this IPO, at least 75% is reserved for qualified institutional buyers i.e. QIB, while 15% is reserved for non-institutional investors i.e. NII and 10% is reserved for retail investors. Merchant bankers include JM Financial, Axis Capital and ICICI Securities.

(Disclaimer: The advice to invest in stocks has been given by the brokerage house. These are not the personal views of digitnews. There are risks in the market, so take expert opinion before investing.)

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