Buy Apeejay Surrendra Park Hotels Ltd For Target Rs.156 by Prabhudas Liladhar Capital Ltd
Soft operating performance
We cut our EBITDA estimates by 4.4%/4.6% for FY27E/FY28E as we fine tune our RevPAR growth and margin assumptions. PARKHOTE IN reported a modest operating performance with EBITDA margin of 28.1% (PLe 28.8%); while RevPAR was flat at INR6,858 amid a challenging operating environment. Led by acquisition of Zillion Hotels, Juhu and the buyout of Malabar House, Fort Kochi and Purity, Lake Vembanad, we do not foresee any major delays in the near term planned inventory pipeline. Further, Flurys is poised to expand its geographical footprint, with planned addition of ~30 new outlets in FY27E. To support this expansion, PARKHOTE IN is actively engaging with mall developers, airport owners and multiplex operators to secure strategic locations across multiple geographies. We expect sales/EBITDA CAGR of 17%/20% over FY26-FY28E and retain BUY with a SoTP based TP of INR156 valuing the hotel business at 11.5x FY28E EBITDA and Flurys at 1.5x FY28E sales (no change in target multiple).
Revenue increased 8.1% YoY:
Revenue increased 8.1% YoY to INR1,668mn (PLe INR1,658mn). Hotels revenue increased 6.2% YoY to INR1,468mn while Flurys revenue grew 25.0% YoY to INR200mn. ARR increased 1.7% YoY to INR7,459 while occupancy stood at 92.0%, translating into a RevPAR of INR6,858 (up 1.6% YoY).
EBITDA margin stood at 28.1%:
EBITDA increased 3.2% YoY to INR469mn (PLe INR477mn) with a margin of 28.1% (PLe 28.8%) as against a margin of 29.4% in 1QFY26. PAT decreased 14.4% YoY to INR115mn (PLe INR155mn) for the quarter with a margin of 6.9% (PLe 9.3%) as compared to a PAT margin of 8.7% in 1QFY26. Higher than expected depreciation at INR211mn (PLe INR182mn) and finance cost at INR104mn (PLe INR88mn) led to miss at the bottom-line.
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