Prabhudas Lilladher has maintained a 'Buy' rating on Apeejay Surrendra Park Hotels with a target price of Rs 235. While the company's expansion plans for its hotel and Flurys business show growth potential, investors should note that rising interest costs impacted profitability in the recent quarter.
Prabhudas Lilladher has issued a report on Apeejay Surrendra Park Hotels (ASPHL), setting a target price of Rs 235. This assessment comes as the company continues to execute its strategy of expanding its hospitality portfolio and growing its food and beverage brand, Flurys.
To understand the company's current financial health, it is important to look at the results for the quarter ending June 2026. ASPHL reported a revenue of Rs 166.8 crore, which is an 8.1% increase compared to the same period last year. While the top-line revenue is growing, the company’s net profit declined by 14.4% to Rs 11.5 crore. The primary reason for this dip was a sharp 60% rise in interest costs, which climbed to Rs 10.4 crore for the quarter. For shareholders, this indicates that while the business is capturing more revenue, the cost of servicing debt is currently putting pressure on overall profitability.
The company’s strategy relies on two main pillars: its hotel business and the Flurys cafe chain. ASPHL is actively working to expand its footprint in North India, with new cafe outlets being launched in areas like Gurugram. Alongside this, the company continues to add inventory to its hotel pipeline through strategic acquisitions. These initiatives are designed to capture future demand, but they also require significant capital expenditure, which explains the higher debt-related costs seen in the recent financial results.
Looking ahead, the success of this strategy will depend on the company's ability to manage its financial obligations while scaling up operations. The rising interest expense is a key monitorable, as it directly impacts the bottom line. Investors may track whether the revenue growth from new hotel acquisitions and Flurys outlets can accelerate enough to offset these financing costs in the coming quarters.
Risks for the company include potential delays in the execution of its development pipeline and the sensitivity of the hospitality sector to broader economic conditions. Additionally, any further increase in operational costs or tax rates could add to the pressure on net margins. The next few quarterly reports will be important for investors to see if the company can stabilize its interest burden and translate its expansion efforts into improved bottom-line performance.