Home / Concalls / Apeejay Surrendra Park Hotels Limited

Apeejay Surrendra Park Hotels Limited

Details

Apeejay Surrendra Park Hotels Limited Q1FY27 Earnings Call Highlights

Financials

Business Background

Apeejay Surrendra Park Hotels Limited is a leading Indian hospitality company founded in 1967 with the launch of THE PARK Kolkata. The company operates across hotels, F&B and entertainment through four distinct hotel brands THE PARK, THE PARK Collection, Zone by The Park and Zone Connect by The Park covering luxury, upscale, boutique heritage and upper mid-scale segments. As of Q1FY27, ASPHL had 42 hotel properties with 2,677 keys across 32 cities/UTs, along with 111 Flurys stores and 100+ restaurants, nightclubs and bars. Its diversified, experiential hospitality platform is supported by owned, leased and managed assets, while the company is targeting 87 hotels and 6,719 keys by FY30.


Q&A

Q1: How did macro/geopolitical factors impact Q1 performance, and what is the growth outlook for room rates (ADR) going forward?

A: Q1 faced temporary headwinds from the West Asia crisis, flat domestic air traffic, and higher energy costs. Despite this, the company maintained an industry-leading occupancy of 92%. With normalizing conditions, high-single-digit ADR growth is expected driven by upcoming events like the BRIC Summit, Bharat Mobility Expo, Aero Show, and 40 wedding dates through March.


Q2: What drove the 14% year-on-year decline in PAT despite an 8% increase in operating revenue?

A: The contraction in PAT to ~₹12 crore was due to a ₹3 crore increase in finance costs (linked to the acquisition of the Juhu property) and a temporary deferred tax provision of ₹2.2 crore as the company transitioned to the new income tax regime.


Q3: How will the corporate tax rate transition impact future earnings?

A: Under the new tax regime, the tax rate drops from 35% to 25%. Effective tax rates for subsequent quarters (Q2–Q4) are projected to settle around 30% to 35%, which will improve PAT margins.


Q4: What is the company's long-term network expansion target by FY2030?

A: The company aims to double its hotel footprint from 42 hotels (2,677 keys) to 87 hotels (6,719 keys) by 2030 through 2x growth in owned assets and 3x+ growth in asset-light management models.


Q5: What is the current store count and expansion strategy for the "Flurries" cafe brand?

A: Flurries operates 111 outlets across cafes, kiosks, and tea rooms. The company plans to add 29 outlets in FY27 to reach 140 stores (including entering Delhi NCR, Pune, Hyderabad, and Bangalore) and eventually scale to 400 outlets by 2030 using an asset-light model.


Q6: What is the status of the EM Bypass mixed-use project in Kolkata, and how does it benefit cash flows?

A: The project features a 218-room hotel and 69 service apartments. 33 apartments have been sold at an average realization of ~₹20,633/sq. ft., bringing in ₹21 crore in Q1. Total expected cash generation is ₹70–80 crore in FY27 and ₹300–325 crore over four years, effectively funding the development of the hotel asset.


Q7: How does mixed-use (hotel + residential) development impact long-term Return on Capital Employed (ROCE)?

A: Mixed-use developments offset high land acquisition costs via upfront apartment sales. Monetizing residential components generates cash flow to build hotel assets virtually "debt-free," which is expected to elevate overall company ROCE from ~9-10% toward 20%+ by 2030.


Q8: How is the company utilizing extra FSI for its land parcel in Pune?

A: The available FSI in Pune increased from 2.5 lakh sq. ft. to 6.7 lakh sq. ft.. The plan is to utilize 2.5 lakh sq. ft. for a hotel development and 4 lakh sq. ft. for residential development to maximize asset value.


Q9: What are the details and timeline for the new hotel development in Juhu, Mumbai?

A: The company acquired the site at ~₹40,000/sq. ft. and is converting 60 service apartments into a 78-room boutique hotel with strong F&B focus (including a rooftop bar). Design phase is complete, and launch is targeted for October 2027.


Q10: What progress is being made on the Vizag and Fort Kochi acquisitions?

A: Construction is underway for a 100-room hotel in Vizag targeted for completion by early 2030. The acquisition of the 17-key Malabar House in Fort Kochi on 0.5 acres of land (costing ~₹64 crore) is set to close by October–November 2026.


Q11: What is the total Capex pipeline and how will it be funded?

A: Total capex requirement across core development pipeline (Mumbai, Pune, Vizag, Kolkata, Jaipur) and refurbishment is ~₹1,500 crore over the coming years. Funding will come from internal cash flows/EBITDA (~₹240–250 crore annually), ₹350 crore from Kolkata apartment sales, existing mutual fund reserves, and available credit lines.


Q12: What is the company's current balance sheet strength and debt position?

A: The balance sheet remains under-leveraged with a Debt-to-Equity ratio of 0.12 and Net Debt-to-EBITDA of 0.72x, providing ample headroom for capital allocation.


Q13: How long do newly acquired or opened properties take to stabilize operational metrics?

A: Standard properties take 2–3 years to stabilize. However, in high-demand or low-supply markets (such as Mumbai, Pune, or Kolkata), stabilization occurs faster within 1 to 1.5 years.


Q14: What was the composition of Other Income during the quarter?

A: Other income stood at ₹4.79 crore, primarily driven by ₹2.73 crore in yields from mutual fund holdings (~₹97 crore corpus). Management expects quarterly other income to remain stable around ₹3.5–4 crore as cash inflows from apartment sales build up funds.

Strategic Outlook

  1. ASPHL is targeting 6,000+ hotel keys by FY30, supported by a predominantly managed and asset-light portfolio. The overall roadmap envisages 87 hotels and 6,719 keys by FY30 versus 42 operational hotels currently.
  2. Expansion of Flurys remains a key growth priority, with the company continuing to scale the brand across NCR and other regions. The multi-format model is expected to support faster expansion across high-footfall locations.
  3. The company plans to accelerate growth in the upper mid-scale segment through Zone by The Park and Zone Connect, while maintaining industry-leading occupancy levels across its existing portfolio.
  4. Several hotel projects are progressing across Mumbai, Navi Mumbai, Pune and Vizag. These include a 78-room Juhu hotel, a 250-room Navi Mumbai expansion, a 200-room Pune project and a 100-room Vizag expansion.
  5. The EM Bypass Kolkata project is expected to generate significant cash flows, with estimated collections of ₹80 crs in FY27, ₹120 crs in FY28, ₹110 crs in FY29 and ₹34 crs in FY30. The second phase launch is planned for Diwali 2026.
  6. Management remains focused on sustaining high occupancy and RevPAR while expanding the hotel network and Flurys footprint. The combination of strong brands, asset-light growth and development opportunities supports the company’s long-term growth outlook.


Business Strategy

  1. ASPHL follows a diversified hospitality model spanning hotels, F&B and entertainment, with a portfolio covering luxury and upscale, boutique heritage and upper mid-scale segments across metros and Tier 2/3 cities.
  2. The company is pursuing an asset-light expansion strategy, with managed hotels forming a significant part of its future portfolio. This approach is aimed at scaling the hotel network while limiting capital deployment.
  3. ASPHL is expanding its upper mid-scale brands, Zone by The Park and Zone Connect by The Park, to capture opportunities across faster-growing markets and cater to price-conscious and design-conscious customers.
  4. The company is building an integrated hospitality, dining and entertainment ecosystem through 100+ restaurants, nightclubs and bars. This strategy is designed to enhance customer engagement, brand recall and wallet share per guest.
  5. Flurys is being scaled as a national premium café and retail F&B platform through cafés, kiosks, tea rooms and restaurants. Its asset-light formats allow the brand to expand with relatively limited capital deployment.
  6. The company is also seeking to unlock value from its prime hospitality assets and land parcels through development and monetisation opportunities, while leveraging technology such as NOR1’s AI-driven upselling platform to improve guest personalisation.


Future Prospects


Key Highlights

  1. Apeejay Surrendra Park Hotels delivered a resilient Q1FY27 performance, with revenue from operations rising 8.12% YoY to ₹166.78 crs. Total EBITDA increased 3.24% YoY to ₹46.86 crs, while EBITDA margin stood at 28.10%.
  2. The company maintained industry-leading occupancy of 92% in Q1FY27, retaining its leadership in occupancy and RevPAR within India’s upper-upscale hospitality segment. ARR stood at ₹7,459, while RevPAR was ₹6,858.
  3. F&B continues to be a significant revenue contributor, accounting for 43% of total revenue in Q1FY27. The company operates 100+ F&B and entertainment outlets, while Flurys generated ₹20.0 cr of income during the quarter.
  4. The EM Bypass Kolkata residential project witnessed strong customer response, with 32 of 69 apartments sold. Q1 collections stood at ₹21.3 cr, with full-year collections expected at approximately ₹80 cr.
  5. The company continued to expand its hospitality portfolio, adding 142 new keys in Q1FY27 and having a total of 45 hotels/4,042 keys under development. The FY30 roadmap targets 87 hotels and 6,719 keys.
  6. ASPHL maintained a strong balance sheet, with net debt-to-equity at just 0.12x at FY26-end. The company also successfully implemented SAP S/4HANA Finance to strengthen financial controls, reporting and operational efficiency.


Performance

Q1 FY27:

  1. Revenue from operations: ₹166.78 crs (↑8.12% YoY)
  2. EBITDA: ₹46.86 crs | EBITDA Margin: 28.10% (↓133 Bps)
  3. PAT: ₹11.71 crs | PAT Margin: 7.02% (↓150 Bps)


FY26:

  1. Revenue from operations: ₹707.28 crs
  2. EBITDA: ₹218.02 crs | EBITDA Margin: 30.83%
  3. PAT: ₹66.80 crs | PAT Margin: 9.44%


Disclaimer

This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. Recipients may not receive this report at the same time as other recipients. The information contained herein is from the public domain or sources are believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. In so far as this report includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed. Opinions expressed are current opinions as of the date appearing on this material only. While we endeavour to update on a reasonable basis, the information discussed in this material, Mr Avinash Gorakshakar is under no obligation to update or keep the information current. Further there may be regulatory, compliance, or other reasons that prevent me from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. Avinash Gorakshakar and any person connected with it, will not in any way be responsible for the contents of this report or for any losses, costs, expenses, charges, including notional losses/lost opportunities incurred by a recipient as a result of acting or non-acting on any information/material contained in the report. This is not an offer to sell or a solicitation to buy any securities or an attempt to influence the opinion or behaviour of investors or recipients or provide any investment/tax advice. This report is for information only and has not been prepared based on specific investment objectives. The securities discussed in this report may not be suitable for all investors. Investors must make their own investment decision based on their own investment objectives, goals and financial position and based on their own analysis. Trading in stocks, stock derivatives, and other securities is inherently risky and the recipient agrees to assume complete and full responsibility for the outcomes of all trading decisions that the recipient makes, including but not limited to loss of capital. Opinions, projections and estimates in this report solely constitute the current judgment of the author of this report as of the date of this report and do not in any way reflect the views of Avinash Gorakshakar. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

SEBI REGN NO. INH000001071