Add Juniper Ltd For Target 230 by Choice Institutional Equities Ltd
Bought 287-key Novotel with 62% Occupancy for INR 2.5 Bn
JUNIPER’s board has approved the plans for the acquisition of a Khopoli property (~80 kms from Mumbai). The property, Novotel, is adjacent to Imagicaa Theme and Water Parks, offering a strong demand support (62% occupancy) and a healthy F&B revenue (INR 213 Mn / 60% of room revenue). The transaction, valued at INR 2,480 Mn, is expected to be completed by March 2027. We update our assumptions to include the 287 keys from Q2FY28E offering an additional revenue of INR 357 Mn and INR 567 Mn for FY28E and FY29E, respectively.
The acquired hotel generated an ARR of ~INR 9,600 for Q1FY27 with an occupancy level of 62%. We await more details on the potential rebranding which can lead to an upside in ARRs.
View and Valuation
We upgrade our revenue estimate by 2.7% and 3.7% for FY28E and FY29E, respectively. However, we project the acquisition to subtly dilute margin and increase finance cost. We believe the company will have to additionally borrow INR 1,000 Mn in FY27, after selling investments of INR 734 Mn.
We pencil in an increase in EBITDA of ~2% for FY28E and raise our TP by INR 10 to INR 230/share. We apply an EV/EBITDA multiple of 11.0x on FY28E EV/Adj. EBITDA. Our DCF valuation of INR 230/share provides a sanity check. Our TP implies an upside of ~6%, therefore, we assign an ‘ADD’ rating on the stock.
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SEBI Registration no.: INZ 000160131
