Buy Apeejay Surrendra Park Hotels; target of Rs 235: Prabhudas Lilladher

Prabhudas Lilladher's research report on Apeejay Surrendra Park Hotels

We cut our EPS estimates by ~4% for FY27E/FY28E as we fine-tune storeopening timelines for Flurys and realign our tax rate assumptions. PARKHOTE IN reported healthy operating performance with EBITDA beat of 4% led by double-digit growth in RevPAR while bottom-line was marred by a higher tax rate of 41.9% (PLe 30%). While PARKHOTE IN intends to open 30 outlets for Flurys in FY26E now versus an earlier target of 40; there was visible traction on the hospitality side as a) acquisition of Zillion Hotels, Juhu got culminated, b) approval was granted by KMC for the mixed-use project at EM Bypass, Kolkatta. We expect sales CAGR of 17% over the next 3 years driven by addition of 258 hotel rooms and 120 outlets of Flurys with an EBITDA margin of 33.1%/33.5%/36.3% in FY26E/FY27E/FY28E respectively.

Outlook

We maintain BUY with SoTP based TP of Rs 235 valuing hotel business at 15x Sep-27E EBITDA (no change in target multiple) and Flurys at 3x Sep-27E sales (no change in target multiple).