Apeejay Surrendra Park Hotels Limited — Q1 FY26 earnings call

Call held 11 Aug 2025

Management summary

Apeejay Surrendra Park Hotels reported a strong Q1 FY26, driven by robust topline and EBITDA growth, high occupancy, and strategic expansion across its hotel and Flurys segments. The company is actively pursuing asset-light growth, key acquisitions in luxury segments, and significant capex in technology and property upgrades, all while maintaining a comfortable liquidity position and positive net debt. Management expressed high confidence in achieving its ambitious growth targets.

Highlights

  • Topline grew 14% YoY and EBITDA grew 16% YoY in Q1 FY26.

  • Achieved India's highest occupancy of 92% and 13% ARR improvement.

  • Flurys revenue for Q1 FY26 was INR 19 crore, up 42% YoY, targeting INR 85-90 crore for FY26.

  • Planned addition of close to 600 rooms in FY26 across 14 hotels, reaching 2,983 keys by 2025.

  • Strategic acquisitions include 90% stake in Zillion Hotels (Mumbai) for INR 206 crore and Malabar House/Purity (Cochin) for INR 62 crore.

  • EM Bypass Kolkata project expected to generate over INR 600 crore in revenues, with ASPHL's share contributing INR 100 crore per year for 3 years.

  • Total capital outlay of INR 1,700 crore over 5 years, with INR 300 crore planned for FY26, funded primarily by internal accruals and existing credit lines.

  • New owned properties in premium luxury segment expected to drive significantly higher ARRs and margins.

Key financials

2 periods

Headline

  • Topline Growth
    14%
    YoY +14%
  • EBITDA Growth
    16%
    YoY +16%
  • Occupancy
    92%
  • ARR Improvement
    13%
    YoY +13%
  • RevPAR Increase
    12%
    YoY +12%
  • Flurys Operating Margin (pre-IndAS)
    8.5%
  • Flurys Operating Margin (post-IndAS)
    2.3%

Q1 FY26

  • Flurys Revenue
    ₹19 Cr
    YoY +18.8% QoQ -6%
  • Management Contracts Revenue
    ₹4 Cr

What they filed

Q1 FY27: revenue up 8.4%, net profit down 15.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue142 177 177 154 167 +18%200 +13%184 +4%167 +8%
EBITDA43 64 62 45 49 +14%71 +11%53 −15%47 +4%
Net profit27 32 27 13 16 −41%24 −25%12 −56%11 −15%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Financial Performance

  • Revenue & EBITDA Growth Financial Performance · in the years ahead · High confidence high teen growth
    Having delivered sustained double-digit growth in FY25, we are confident of achieving high teen growth in both revenues and EBITDA in the years ahead, backed by resilient demand, improved pricing power, steady portfolio expansion in the premium luxury segment, and continued leadership in the upper upscale segment, we are well placed to capture the opportunities ahead.

    — Vijay Dewan

Hotel Expansion

  • Rooms Addition Hotel Expansion · FY26 · High confidence close to 600 rooms
    FY26 will see addition of close to 600 rooms, 411 rooms in the asset category of management contract, 147 rooms in leased category and 31 rooms in the ownership category.

    — Vijay Dewan

  • Total Keys Hotel Expansion · by 2025 · High confidence 2,983 keys
    Total number of rooms will increase from 35 hotels with 2,394 keys to 50 hotels with 2,983 keys in line with our vision of 50 hotels by 2025.

    — Vijay Dewan

Flurys Expansion

  • New Store Openings Flurys Expansion · FY26 · High confidence 40 outlets

    Previously 50 outlets → 40 outlets

    So, we will open 40 stores as per the plan this year.

    — Vijay Dewan

  • Total Stores Flurys Expansion · by 2027 · High confidence 200 stores
    And then we plan to open 60 stores in the coming year to reach the 200 marks by 2027, which is the centenary year of Flurys.

    — Vijay Dewan

  • Total Stores Flurys Expansion · by FY30 · High confidence 350 to 400 stores
    Yes. We are also committed not only to 200 stores by FY27. We plan to open 350 to 400 stores by FY30, that has been our plan for Flurys, and we are well on course to deliver that.

    — Vijay Dewan

Flurys Profitability

  • Annual Revenue per Mature Outlet Flurys Profitability · High confidence INR 1 crore
    We continue to target annual revenues of INR 1 crore for mature outlets

    — Vijay Dewan

  • EBITDA Margin Flurys Profitability · after 200 outlets are stabilized · High confidence 12% to 15%
    We expect the margins to be always in the range of 12% to 15%, because this is considered to be leading margin.

    — Vijay Dewan

Flurys Revenue

  • Total Revenue Flurys Revenue · FY26 · High confidence INR 85 crore to INR 90 crore
    And last year, we had done total revenues of INR 64 crore, and this year, with the opening of 40 outlets and organic growth, we expect the revenues at Flurys to be in the range of INR 85 crore to INR 90 crore.

    — Vijay Dewan

Flurys Revenue per Store

  • Revenue per Store Flurys Revenue per Store · by the end of this year · High confidence INR 70 lakhs to INR 80 lakhs
    So, FY26, as I said, we will be reaching about INR 85 crore to INR 90 crore and we should be heading for about INR 70 lakhs to INR 80 lakhs by the end of this year per store.

    — Vijay Dewan

  • Revenue per Store Flurys Revenue per Store · by next year · High confidence INR 1 crore or INR 1 crore plus
    And by next year, we are absolutely confident that all these stores will be in the range of INR 1 crore or INR 1 crore plus.

    — Vijay Dewan

Management Contracts

  • Revenue from Management Contracts Management Contracts · FY26 · High confidence over INR 20 crore
    Since we are signing more contracts, we expect this year to close at over INR 20 crore from the management contract division.

    — Atul Khosla

  • Revenue from Management Contracts Management Contracts · FY26 · High confidence INR 25 crore
    So, we are going to do INR 20 crore and with the addition of this, which we are signing, that should contribute another INR 4 crore to INR 5 crore. So, we will end up at INR 25 crore, expected from the management contract division, including INR 5 crore in H2.

    — Atul Khosla

  • Management Fees Margin Management Contracts · High confidence 5.5% to 6%
    about 5.5% to 6% will be management fees of which about 70% will flow through to the EBITDA margin.

    — Atul Khosla

EM Bypass Project

  • Total Project Revenue EM Bypass Project · High confidence over INR 600 crore
    The total project is expected to generate over INR 600 crore in revenues

    — Vijay Dewan

  • ASPHL Share of Revenue EM Bypass Project · next 3 years · High confidence INR 100 crore per year
    our share expected to contribute INR 100 crore per year over the next 3 years.

    — Vijay Dewan

  • ASPHL Share of Revenue EM Bypass Project · FY26 · High confidence around INR 30-odd crore
    So, expecting our share will be around INR 30-odd crore this year

    — Vijay Dewan

  • Completion Timeline EM Bypass Project · April 2028 · High confidence April of 2028
    enabling us to efficiently progress towards our goal of completing both the residential and hotel components by April of 2028.

    — Vijay Dewan

Zillion Hotels Acquisition (Mumbai)

  • Acquisition Cost Zillion Hotels Acquisition (Mumbai) · within this month · High confidence INR 206 crore
    80 rooms, Zillion Hotels & Resorts at Juhu for 90% stake at INR 206 crore to be concluded within this month

    — Vijay Dewan

  • Refurbishment & Development Spend Zillion Hotels Acquisition (Mumbai) · High confidence about INR 60-odd crore
    And we plan to spend about INR 60-odd crore for the refurbishment and development, and renovation of this hotel.

    — Vijay Dewan

  • Hotel Delivery Zillion Hotels Acquisition (Mumbai) · H2 FY27 · High confidence H2 of next year
    we should be able to deliver this hotel to all of us by H2 of next year.

    — Vijay Dewan

  • Stabilized Annual Revenue Zillion Hotels Acquisition (Mumbai) · year after that · High confidence around INR 60 crore
    Our stabilized year of forecast for this property, that is not next year, the year after that would be somewhere around INR 60 crore

    — Vijay Dewan

  • Stabilized EBITDA Zillion Hotels Acquisition (Mumbai) · stabilized year of operation · High confidence INR 24 crore to INR 28 crore
    and giving EBITDA margin of anywhere between INR 24 crore to INR 28 crore in the stabilized year of operation.

    — Vijay Dewan

  • Next Year Revenue Contribution Zillion Hotels Acquisition (Mumbai) · next year · High confidence INR 20 crore to INR 25 crore
    I do expect this property to give somewhere around INR 20 crore to INR 25 crore next year

    — Vijay Dewan

  • Next Year Bottom Line Contribution Zillion Hotels Acquisition (Mumbai) · first 6 months · High confidence INR 6 crore to INR 7 crore
    and add about INR 6 crore to INR 7 crore to the bottom line in the first 6 months.

    — Vijay Dewan

  • Stable Performance Zillion Hotels Acquisition (Mumbai) · FY28 · High confidence 27-28
    And I would consider 27-28 to have stable performance for this property.

    — Vijay Dewan

  • Revenue Potential Zillion Hotels Acquisition (Mumbai) · High confidence not less than INR 80 crore
    No, no. The revenue potential of the property would be not less than INR 80 crore at current market trends of INR 18,000 to INR 20,000 ARR.

    — Vijay Dewan

  • EBITDA Margin Zillion Hotels Acquisition (Mumbai) · to start with · High confidence roughly about 40% to 50%
    I should be able to get roughly about 40% to 50% margin, yes, INR 24 crore to INR 28 crore would be my EBITDA to start with.

    — Vijay Dewan

Cochin Acquisitions (Malabar House & Purity)

  • Acquisition Cost Cochin Acquisitions (Malabar House & Purity) · by the end of September · High confidence INR 62 crore
    and 31 rooms at Cochin at a cost of INR 62 crore to be concluded by the end of September.

    — Vijay Dewan

  • Keys Addition Cochin Acquisitions (Malabar House & Purity) · second half of this year or next year · High confidence around 31 keys
    Yes, also coming to that point, my understanding is this will add around 31 keys by second half of this year or next year?

    — Raman KV

  • Stabilized Peak Revenue Cochin Acquisitions (Malabar House & Purity) · next year · High confidence around INR 20 crore
    This year, the peak revenue expected once stabilized after the takeover, which could be next year, or the next few years is expected to be around INR 20 crore.

    — Atul Khosla

  • Takeover Year Revenue Cochin Acquisitions (Malabar House & Purity) · FY26 · Medium confidence INR 8 crore
    INR 10 crore may not come this year as in the takeover year the focus is mainly on stabilization. This year it could be INR 8 crore.

    — Atul Khosla

  • EBITDA Margin Contribution Cochin Acquisitions (Malabar House & Purity) · this year as well as we go along · High confidence 40% to 50%
    The Palace Hotels as well as these 2 hotels in Cochin are going to significantly add to the EBITDA margin, this year as well as we go along, 40% to 50%, yes.

    — Vijay Dewan

Capex

  • Annual Property Upgrade Budget Capex · annualized basis · High confidence about INR 50 crore
    we have a fixed budget of about INR 50 crore, and we will continue to be on cost to invest INR 50 crore on an annual basis to upgrade our existing properties.

    — Vijay Dewan

  • Technology & AI Spend Capex · this year · High confidence around INR 15 crore
    The Company during the course of this year will be spending around INR 15 crore in technology and Al to improve efficiencies and performance.

    — Vijay Dewan

  • Total Capital Outlay Capex · next 5 years · High confidence about INR 1,700 crore
    our total capital outlay over the next 5 years is about INR 1,700 crore.

    — Vijay Dewan

  • Total Spend Capex · this year · High confidence roughly about INR 300-odd crore
    And during the course of this year, we plan to spend roughly about INR 300-odd crore.

    — Vijay Dewan

  • Net Expansion Plan Capex · over the 5-year period · High confidence around INR 1,400 crore
    So, net expansion plan would be around INR 1,400 crore.

    — Vijay Dewan

Funding

  • Mutual Fund Balance Funding · current · High confidence about INR 70 crore
    our current mutual fund balance is about INR 70 crore.

    — Atul Khosla

  • Available Loan Balance Funding · current · High confidence about INR 25 crore pending
    existing limits of the Bank, we have about INR 25 crore pending.

    — Atul Khosla

  • Net Additional Debt (Standalone) Funding · High confidence not exceed INR 100 crore
    When you say standalone, yes, we will not exceed INR 100 crore net debt, but I am saying net debt will still remain positive.

    — Atul Khosla

Leased Properties

  • EBITDA Margin (post-rental) Leased Properties · High confidence 20% to 25%
    Post these rental, we expect around 20% to 25% margins.

    — Atul Khosla

  • EBITDA Contribution (pre-indexed) Leased Properties · High confidence about 30%
    But for the purpose of blended EBITDA, it will be pre-indexed. So, it should contribute about 30% to the EBITDA overall.

    — Atul Khosla

  • Operating Margins (post-index) Leased Properties · High confidence 30% to 35%
    Yes, 30% to 35%.

    — Atul Khosla

Market context

  • Net Debt Funding · High confidence positive
    But net debt will remain positive.

    — Atul Khosla

Risks & concerns

  • Competitive intensity in the Flurys segment

    medium

    Analyst questioned how Flurys would sustain margins against new entrants and e-commerce players.

    Analyst acknowledged

  • Business disruptions impacting Q1 performance

    low

    Analyst mentioned 10 days of business disruptions in Q1, which management implied was managed effectively.

    Analyst acknowledged

Q&A highlights

3 direct
Flurys store expansion strategy and sequential sales performance Direct
No, not that we are lowering the guidance. The reason behind this, of course, for this year is to actually move away from kiosk to cafes. And obviously, the investment level has been kept at the same level, because for us the cafes costs more than the kiosk. So, in terms of the spend, in terms of the development, that remains the same, which adds up to 40 as per our planning for this year.

Clarified that the revised FY26 store count guidance (40 vs 50) is a strategic shift towards more profitable cafe formats, not a slowdown, and addressed seasonal impact on sequential sales.

Asked by Archana Gude

Higher ARR projections for new owned properties Direct
So, current properties, as you know, which are 1,101 keys are operating in the upper upscale segment in the boutique category... But the new properties, which is about 1,035 keys are all coming in the premium luxury category. So, that is why these ARRs are going to be much higher, and they will have a significant impact in improving our margins.

Revealed a strategic shift towards premium luxury segments for new owned properties, justifying higher ARR projections and indicating a positive impact on overall margins.

Asked by Vaibhav Muley

Margin sustainability for Flurys amidst competition Direct
So, Flurys, firstly is in a very, very unique position. It is a combination of coffee, confection, and celebration, which is a very unique positioning for Flurys. It has a very long heritage. It completes 100 years in 2027... And this business is growing very rapidly at the rate of 18% to 20%... So, all this competition would be there, but India is a very, very large market. India, also a very young market. And with changing habits, we should be able to grow faster and also protect and deliver higher margins.

Addressed competitive concerns by highlighting Flurys' unique brand positioning, heritage, and the overall rapid growth of the Indian confectionery and coffee market, suggesting ample room for growth and margin protection.

Asked by Sarthak Awasthi

3 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Highlights

Apeejay Surrendra Park Hotels delivered a strong Q1 FY26, reporting a 14% topline growth and a 16% EBITDA growth. The company achieved an industry-leading occupancy of 92% and maintained its RevPAR leadership in the upper upscale segment. Average Room Rate (ARR) improved by 13%, and RevPAR increased by 12%, reflecting robust demand and effective pricing strategies. This performance underscores the company's operational efficiency and strong market positioning.

Strategic Hotel Expansion and Asset-Light Growth

The company is on track to add close to 600 rooms in FY26 across 14 new hotels, increasing its total keys to 2,983 by 2025, in line with its vision of 50 hotels. This expansion includes 411 rooms under management contracts, 147 leased rooms, and 31 owned rooms. New properties are being added in high-potential leisure destinations like Goa, Manali, Shimla, and Dharamsala, as well as key business markets, broadening the company's geographic reach and enhancing its positioning.

Flurys Brand Expansion and Profitability Targets

Flurys, the company's iconic bakery and confectionery brand, reported Q1 FY26 revenue of INR 19 crore, representing a 42% YoY growth. The expansion strategy for FY26 involves opening 40 new stores, with a strategic shift from kiosks to more profitable cafe formats. The company aims to reach 200 stores by 2027 and 350-400 stores by FY30. Flurys is projected to achieve INR 85-90 crore in revenue for FY26, with mature outlets targeting INR 1 crore in annual revenue and an EBITDA margin of 12-15% post-stabilization.

Key Acquisitions in Luxury and Boutique Segments

Apeejay Surrendra is making two significant acquisitions: a 90% stake in Zillion Hotels & Resorts in Mumbai for INR 206 crore, which will be converted into an 80-room super luxury boutique hotel by H2 FY27. This property is expected to generate INR 20-25 crore in revenue next year and INR 60 crore annually with a 40-50% EBITDA margin once stabilized by FY28. Additionally, the acquisition of Malabar House and Purity in Cochin for INR 62 crore will add 31 keys, contributing INR 8 crore in revenue this year and a stabilized peak revenue of INR 20 crore with 40-50% EBITDA margins.

EM Bypass Kolkata Project Progress

The EM Bypass Kolkata project, a joint development, is progressing well, with residential apartment sales expected to commence around the Diwali season. The total project is anticipated to generate over INR 600 crore in revenues, with ASPHL's share contributing approximately INR 30 crore in FY26 and INR 100 crore per year for the subsequent three years. The project, encompassing both residential and hotel components, is targeted for completion by April 2028, poised to deliver strong Return on Capital Employed (ROCE).

Capital Allocation and Funding Strategy

The company plans a total capital outlay of INR 1,700 crore over the next five years, with approximately INR 300 crore allocated for FY26. This includes INR 15 crore for technology and AI investments and an annual budget of INR 50 crore for existing property upgrades. Funding will primarily be sourced from internal accruals, supported by a current mutual fund balance of INR 70 crore and available credit lines of INR 25 crore. Management is confident that net debt will remain positive and will not exceed INR 100 crore on a standalone basis, ensuring a comfortable liquidity situation.

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