The initial public offer of Apeejay Surrendra Park Hotels kicked off on a strong note with the Rs 920-crore issue subscribed 2.52 times on the day of opening of the public issue.

The retail book was subscribed 5.7 times, while the qualified institutional buyers and non-institutional investors quota were booked 1.17 and 3.24 times, respectively. At a price band of Rs 147-155, the stock will have a price earning (PE) multiple of 56 times, compared with the hospitality sector average of 72 times at present.

Park is the first IPO from Calcutta, where the company is based, to hit the market this year. It is also the first public offer from the Apeejay Surrendra group, owned by the Paul family, which has business interests in shipping, logistics, real estate and retail. The promoters will hold a 68 per cent stake post IPO.

Priya Paul, chairperson of the company, expressed satisfaction with the strong response from the investors, adding that the hotel chain has a robust growth pipeline going forward.

Park’s journey, which began with the eponymous property on Calcutta’s sunset boulevard Park Street in 1967, has reached a milestone of 30 hotels having 2,298 rooms, including seven properties owned by it. The company is expected to have 4,603 rooms in five years, which include additional 803 rooms under the ‘owned’ category.

While the investment in the new properties (owned) would be significant, the proceeds from the IPO would not be used for that as the promoters are looking to make the company net cash positive by paying off debt. The growth capex would come from the internal accruals which Paul hoped would be significant enough.

“First of all, there is a demand and supply mismatch. Second, consumption is coming back in India and rates are going up. We expect that to be a strong trend in the years to come,” Paul said.

One of the significant new additions to Park’s portfolio would be a mixed-use development on Calcutta’s EM Bypass, where it would be partnering the Ambuja Neotia group as reported by The Telegraph. While Park will own and operate a 250-key hotel, Ambuja is going to build a serviced apartment project.

The company is likely to fund the construction of the hotel from the proceeds of the serviced apartment venture.

Apart from Calcutta, Park is in the process of developing a 200-key hotel in Pune which will be operational by 2026-27. The company will also add a 100 room to the existing Visakhapatnam hotel and 80-keys to the Navi Mumbai property. It also intends to build a 200-key property in Jaipur.

Paul also shared plans to expand the footprint of Flury’s, the tea room and confectioner, pan India. While it is present in Bengal and Maharashtra (Mumbai), the chain will reach Delhi, Hyderabad and Pune.