Brokerage firm Prabhudas Lilladher maintains a 'Buy' rating on Apeejay Surrendra Park Hotels with a target price of Rs 156. The firm cites the company's aggressive expansion plans in both hotels and the Flurys retail chain as growth drivers. Investors should monitor the impact of recent interest costs on profits, as the company faces a period of margin pressure.
Brokerage firm Prabhudas Lilladher has maintained its 'Buy' rating on Apeejay Surrendra Park Hotels, setting a target price of Rs 156. This positive outlook from the brokerage comes at a time when the stock has faced downward pressure, trading near Rs 112 as of September 10, 2026, which is well below its 52-week high of Rs 164.10.
Financial Performance Context
The brokerage's optimism is anchored in the company's future growth plans, even as the recent quarterly results showed mixed outcomes. In the first quarter of fiscal year 2027, the company reported a 9.6% year-on-year increase in revenue, reaching Rs 172 crore. However, profit after tax declined by 14.4% to Rs 11 crore during the same period. This drop in profitability was primarily driven by higher interest expenses from recent borrowings and deferred tax provisions. The operating EBITDA margin stood at 28.12%, highlighting the current pressure on margins as the company scales its operations.
Growth Strategy and Capacity Expansion
Apeejay Surrendra Park Hotels is currently focused on an aggressive expansion strategy. The company is working to grow its operational capacity significantly, with a goal to reach 6,719 keys across 87 hotels by the end of fiscal year 2030, compared to its current 2,677 keys across 42 properties. To achieve this, the company is using a mix of owned and managed properties to keep capital spending efficient.
Beyond its core hospitality business, the group is aggressively expanding its Flurys retail food and beverage brand. The company is actively securing space in high-traffic locations like malls and airports, with a goal to reach a network of 130 to 140 outlets by fiscal year 2027. This dual-engine approach, combining hospitality growth with the retail food business, is a core part of the company's long-term strategy to drive sales.
Risks to Track
Investors should be mindful of the risks associated with this expansion phase. The primary challenge for the company will be balancing its debt levels as it incurs higher interest costs to fund these projects. Furthermore, maintaining RevPAR—a key metric for hotel revenue—in an increasingly competitive market remains essential for sustaining profitability. Any delay or cost increase in the execution of these expansion projects could further strain the balance sheet.
Investors looking for more clarity on the company’s outlook and management’s plans for the coming year may monitor the upcoming 38th Annual General Meeting, which is scheduled for September 26, 2026. The meeting will be a key opportunity to understand how the company intends to manage its expansion while navigating current financial headwinds.