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Apeejay Surrendra Park Hotels Limited — Q3 FY25 earnings call

Call held 10 Feb 2025

Management summary

Apeejay Surrendra Park Hotels delivered a strong Q3 FY25, marked by double-digit operational growth and record revenues. The company achieved significant improvements in profitability, with PBT up 58.2% and normalized PAT up 17.3%. Key drivers included robust RevPAR and ARR growth across its hotel portfolio, high occupancy rates, and exceptional performance from its Flurys F&B brand, which reached 100 stores. Management outlined aggressive expansion plans for both hotels and Flurys, supported by a debt-free balance sheet and strategic project financing.

Highlights

Consolidated total income reached ₹179 crore, growing 9.2% YoY.
Operational EBITDA stood at ₹63 crore, an 11% YoY increase, with margins at 35.7%.
Profit Before Tax (PBT) surged 58.2% YoY to ₹85 crore.
Normalized PAT grew 17.3% YoY to ₹32 crore.
RevPAR increased by 11.7% to ₹7,658, supported by an 8.9% YoY ARR growth to ₹8,387.
Owned hotels achieved a 91% occupancy rate, with Kolkata at 100% and Navi Mumbai at 95%.
Flurys, the F&B segment, contributed 44% to total income and grew 39% YoY, reaching 100 stores.
The company is now debt-free post its successful listing in February 2024.

Key financials

01 Consolidated Total Income ₹179 Cr +9.2%YoY
02 EBITDA ₹63 Cr +11%YoY
03 EBITDA Margin 35.7%
04 PBT ₹85 Cr +58.2%YoY
05 Normalized PAT ₹32 Cr +17.3%YoY
06 RevPAR ₹7,658 +11.7%YoY
07 ARR ₹8,387 +8.9%YoY

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	142	177	177	154	167 +18%	200 +13%	184 +4%	167 +8%
Expenses	99	113	115	109	118	129	131	120
EBITDA	43	64	62	45	49 +14%	71 +11%	53 −15%	47 +4%
Margin	30%	36%	35%	29%	29%	35%	29%	28%
Other income	15	1	3	2	1	1	0	5
Interest	5	6	6	6	5	10	9	10
Depreciation	14	15	20	18	18	19	19	21
Profit before tax	39	45	39	22	28 −28%	42 −7%	25 −36%	20 −9%
Tax rate	31%	29%	32%	40%	42%	42%	52%	43%
Net profit	27	32	27	13	16 −41%	24 −25%	12 −56%	11 −15%
EPS	1.25	1.51	1.25	0.63	0.76	1.13	0.56	0.54

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.

Segment breakdown

F&B (Flurys)
44% Contribution to Total Income39% YoY Growth

Guidance & targets

Capacity

Total keys Capacity · next 5 years · High confidence 5,048 keys

Over the next five years, we are on track to double our key count to a total of 5,048 keys.

— Vijay Dewan
Owned keys addition Capacity · next 5 years · High confidence 830 keys

This includes development of 830 keys of our own, which include Pune - 200 keys, Kolkata - 250 keys, Vizag - 100 keys, Navi Mumbai - 170 keys, and Jaipur - 150 keys.

— Vijay Dewan

Revenue

Kolkata EM Bypass serviced apartments revenue share Revenue · next 3 years · High confidence ₹300 crore (total), ₹100 crore/year

our share in this will be Rs. 100 crore for the next 3 years. We will get Rs. 100 crore every year for the next 3 years.

— Vijay Dewan
Kolkata EM Bypass hotel ARR Revenue · When open · Medium confidence ₹12,000

you can expect ARR's when it's open in that area is going to be around in the range of Rs. 12,000.

— Atul Khosla
Flurys annual revenue per mature cafe/restaurant store Revenue · High confidence ₹1 crore

each mature Flury store to achieve an annual revenue target of Rs. 1 crore specifically for the cafe and restaurant segment

— Vijay Dewan
ARR growth Revenue · FY26 · High confidence >0.15

we are expecting higher double-digit growth, possibly ahead of 15% as we move forward.

— Vijay Dewan
Lotus Palace Chettinad ARR Revenue · Coming year (FY26) · High confidence ₹15,000

ARRs for the hotel in Chettinad to be in the range of Rs. 15,000

— Vijay Dewan
Ran Bass Patiala ARR Revenue · Coming year (FY26) · High confidence ₹45,000 to ₹50,000

for the Ran Bass Palace to be in the range of Rs. 45,000 to Rs. 50,000 in the coming year.

— Vijay Dewan
Flurys kiosk revenue Revenue · High confidence ₹20 to ₹30 lakhs

Kiosk, the revenue is around Rs. 20 to 30 lakhs.

— Vijay Dewan

Project Cost

Kolkata EM Bypass hotel development cost Project Cost · High confidence Zero cost

this EM Bypass with 250 room in the prime location is going to be with zero cost

— Atul Khosla

Store Count

Flurys total stores Store Count · 2027 · High confidence 200 stores

we plan to reach 200 stores in 2027, its centenary year for Flurys.

— Vijay Dewan
Flurys new store openings Store Count · Coming year · High confidence 40 stores

And we are going to have about 40 stores in the coming year.

— Vijay Dewan
Flurys new store openings Store Count · Next 2 years · High confidence 30 - 50 outlets

over the next 2 years, we plan to add 30 - 50 outlets.

— Vijay Dewan
Flurys stores in Delhi Store Count · Next 2 years · High confidence 20 stores/year

Over the next 2 years in Delhi, we will be adding 20 stores every year.

— Vijay Dewan
Flurys stores in Northern area Store Count · Next 2 years · High confidence 150 stores

roughly about 150 stores in the northern area over the next 2 years.

— Vijay Dewan
Flurys new store additions in Hyderabad Store Count · High confidence 20 stores

The balance 50 are going to be added in Hyderabad

— Vijay Dewan
Flurys new store additions in Mumbai & Pune Store Count · Next 2 years · High confidence 20 stores

add another 20 stores between Mumbai and Pune over the next 2 years to actually take it to the 200 mark.

— Vijay Dewan

Margin

Flurys EBITDA Margin Margin · Going forward · High confidence 18-20%

the margins continue to be industry leading for us in the range of 18% to 20%.

— Vijay Dewan
Coffee procurement savings Margin · High confidence 25%

roughly about 25% savings on coffee will accrue to us as we sort of go forward.

— Vijay Dewan

Profitability

PBT Profitability · Current year (FY25) · High confidence ₹100 crore to ₹120 crore

PBT will be in range of Rs. 100 crore to Rs. 120 crore.

— Atul Khosla

Infrastructure

Flurys central commissary size Infrastructure · During this year · High confidence 20,000 sq ft

we will be setting up a large central commissary, which will be in the range of 20,000 square feet in the Delhi NCR region.

— Vijay Dewan

Occupancy

Palace hotels occupancy rate Occupancy · FY26-27 · High confidence 40-50%

these are going to stabilize in the range of 40% to 50% in FY26-27.

— Vijay Dewan

Capex

CAPEX Capex · Q4 FY25 · High confidence ₹30 crore

Last quarter, the CAPEX plan is approximately Rs. 30 crore.

— Atul Khosla
CAPEX Capex · FY26 · High confidence ₹150 crore to ₹170 crore

And the next financial year, of various projects, the CAPEX should be in the range of Rs. 150 to Rs. 170 crore.

— Atul Khosla

New Additions Pipeline

Pune hotel opening New Additions Pipeline · April 2027 · High confidence 200 rooms

the first project which we will open is in Pune. 200 rooms are going to open in Pune, along with 100 rooms in the same year in '27. So, in FY27, the hotels will open, the first hotel Pune is going to open in April 27

— Vijay Dewan
Vizag hotel opening New Additions Pipeline · October 2027 · High confidence 100 rooms

followed by Vizag 100 rooms in October of '27.

— Vijay Dewan
Kolkata EM Bypass hotel opening New Additions Pipeline · April 2028 · High confidence 250 rooms

This project actually opens in April of 2028. So, in '28-29, you can expect 250 keys opening on account of our hotel in Calcutta.

— Vijay Dewan
Navi Mumbai & Jaipur hotel opening New Additions Pipeline · FY28-29 · High confidence 400 keys

And along with that, in '29, we will open about 400 keys, which is Navi Mumbai and our hotel in Jaipur. So, these will open in FY28-29.

— Vijay Dewan

Management Contracts

Keys added via management contracts Management Contracts · Every year · High confidence 300 keys

Lastly, for each year, as far as the management contracts is concerned, we plan to add roughly about 300 keys every year.

— Vijay Dewan

Other

Flurys Tea royalty income Other · High confidence 1% of total sale

we get a royalty from the parent group, which is 1% of their total sale.

— Vijay Dewan

Risks & concerns

Competitive intensity in management contracts
low

An analyst raised concerns about competition in securing management contracts, but management stated the business is growing well and will continue at the same pace.

Analyst downplayed

Q&A highlights

2 direct

Same-store ARR growth versus new hotel contributions Direct

the ARR by and large is coming from the existing hotels which we are owning... all our hotels are showing above double-digit growth in terms of ARR.

This clarifies that the reported strong ARR growth is primarily organic from existing properties, not solely driven by the higher ARRs of newly opened palace hotels.

Asked by Archana Gude

Potential demerger plans for the Flurys business Partial

as we go to 200 mark, as we cross the 200 mark in FY27, we will be looking at the various options which are available, the Board will be discussing various options available for future growth of the model, as a separate also in terms of SOTP valuation.

Management indicated that a demerger or separate valuation for Flurys is a strategic option that will be considered once the brand reaches 200 stores by FY27, signaling potential future value unlocking.

Asked by Ashish Golechha

Financial details and cash flow generation from the Kolkata EM Bypass project Direct

our share in this will be Rs. 100 crore for the next 3 years... this EM Bypass with 250 room in the prime location is going to be with zero cost, so that zero cost with a very high IRR

This question elicited specific financial projections for a major upcoming project, detailing the expected cash flow from serviced apartment sales and how it will fund the hotel development at effectively zero cost.

Asked by Raman K.V.

3 min read 7 chapters

Detailed narrative

Q3 FY25 Financial Performance Overview

Apeejay Surrendra Park Hotels Limited reported a consolidated total income of ₹179 crore in Q3 FY25, marking a healthy 9.2% YoY growth. Operational EBITDA grew by 11% to ₹63 crore, maintaining strong margins at 35.7%. Profit Before Tax (PBT) saw a significant increase of 58.2% YoY to ₹85 crore, while normalized PAT stood at ₹32 crore, up 17.3% YoY.

Hotel Portfolio & Operational Highlights

The company's owned hotels achieved an impressive 91% occupancy rate, with Kolkata reaching 100%, Navi Mumbai 95%, and Chennai 92%. Q3 ARR grew by 9% to ₹8,387, and RevPAR increased by 11.7% to ₹7,658. Management expects higher double-digit ARR growth, potentially exceeding 15% in FY26, driven by existing hotels and new palace properties like Lotus Palace Chettinad (₹14,000 ARR) and Ran Bass Patiala (₹35,000+ ARR).

Flurys Brand Expansion & Strategy

Flurys, the iconic bakery brand, reached the 100-store milestone with 23 new outlets opened during the year, including 8 in Mumbai. The company plans to expand to 200 stores by 2027, its centenary year, with an annual revenue target of ₹1 crore per mature cafe/restaurant store and EBITDA margins of 18-20%. A large central commissary of 20,000 sq ft is being set up in the Delhi NCR region to support rapid expansion across North India, targeting 150 stores in the northern area over the next two years.

Kolkata EM Bypass Development Project

The company is undertaking a 6 lakh sq ft joint development project in Kolkata, with 3 lakh sq ft for serviced apartments and 3 lakh sq ft for a hotel. The serviced apartments are expected to generate ₹300 crore in revenue share for the company, with ₹100 crore anticipated annually for the next three years. This cash flow will effectively fund the 250-room hotel, making it a 'zero cost' project with an expected ARR of ₹12,000 when operational in April 2028.

Capital Expenditure & Funding Outlook

CAPEX for Q4 FY25 is projected at approximately ₹30 crore, with FY26 CAPEX estimated between ₹150-170 crore. The company expects to fund these investments entirely from internal accruals and the ₹100 crore annual cash flow from the Kolkata EM Bypass project. This strategy aims to maintain a net cash positive position throughout the development cycle, leveraging legacy land parcels for high IRRs of 30-40% on new projects.

Palace Hotels Performance & Future Outlook

The newly opened Lotus Palace Chettinad and Ran Bass The Palace at Patiala are stabilizing, with current ARRs of ₹14,000 and ₹35,000 respectively. For the coming year (FY26), ARRs are targeted at ₹15,000 for Chettinad and ₹45,000-50,000 for Patiala, with occupancy expected to stabilize in the 40-50% range by FY26-27. These properties are key to the company's ARR growth strategy and have received extensive media coverage.

Future Growth & Management Contracts

Apeejay Surrendra Park Hotels aims to double its key count to 5,048 over the next five years, including 830 owned keys in Pune (200 rooms by April 2027), Vizag (100 rooms by October 2027), Kolkata (250 rooms by April 2028), and Navi Mumbai & Jaipur (400 keys by FY28-29). Additionally, the company plans to add approximately 300 keys annually through management contracts, further expanding its presence across India.

This is an AI-generated summary of a publicly available earnings call transcript.

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