Target: ₹245
CMP: ₹189.30
We initiate coverage on Apeejay Surrendra Park Hotels Ltd with a Buy rating and TP of ₹245, valuing it at 19x EV/EBITDA on FY27. We like ASPHL in domestic mid-segment hotels space considering: strong positioning in mid-segment branded hotels in key cities; robust pipeline of hotels in next 4 years; focus on expansion of Flurys business; superior performance on operating metrics compared to industry peers; and Management pedigree.
Its track record of delivering the highest occupancy compared to peers, healthy high single digit growth in ADR and higher revenue contribution from Flurys paves the way for handsome shareholder returns in mid-term.
We anticipate consistent performance on a high base of FY24 and have penciled in modest CAGR of 11/11/26 per cent in net sales/EBITDA/PAT over FY24-27.
Diversified pan India presence across metros and emerging cities: ASPHL operates 34 hotels with 2,410 keys, including properties owned, leased, and managed, under five distinct brands and has aggressive expansion slate lined for upcoming years. Considering the current projects under development, we estimate ASPHL to be present over 45 cities with 61 hotels operating cumulatively 5,048 keys by FY29.
