Apeejay Surrend. Q3 FY24 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 3
Margin
Category 2
Fundraise
No
Order
N/A
Capex
Yes
1 of 4 growth signals are positive — mixed outlook.
Full analysisRevenue guidance
Category 3- Industry expects double-digit growth of 12%-14% in hospitality over the next few years (Q3 FY24 earnings call).
- ASPHL plans to double its inventory from ~2,300 keys to ~4,600 keys over five years, supported by ongoing development projects.
- Expansion includes adding 232 keys in FY24 and FY25, with lease and managed properties contributing significantly.
- ‘Flurys’ outlets to increase from 75 to 83 by March and then double over the next year, driving strong revenue growth in F&B segment.
- Strong Q4 and next financial year expected with double-digit revenue growth supported by demand-supply mismatch and limited new supply in prime markets.
- ARR and RevPAR growth expected due to renovations/upgradations of 10% inventory and market positioning in key cities.
- Geographic expansion planned into Hyderabad and Delhi to further drive growth.
See what Apeejay Surrend. management said on margin guidance — free account, 30 seconds.
Fundraise plans
No- The company has completely repaid its outstanding debt of Rs. 550 crore post-IPO and is currently in a net cash positive position.
- No financial cost (interest cost) is expected from Q1 FY25 onward, indicating no immediate plans for new debt.
- The strong balance sheet (net worth around Rs. 1,200 crore) provides scope for both organic growth and inorganic expansion.
- The management expressed openness to acquiring already built properties if good opportunities arise, suggesting potential future fundraising or deployment of existing cash resources.
- No explicit mention of planned equity fundraising was made in the provided transcript.
- Focus on growth appears centered on asset-light models, lease properties, and development of owned land banks, funded through internal accruals and strong cash position rather than new fundraising.
See what Apeejay Surrend. management said on order book — free account, 30 seconds.
Capex plans
Yes- Planned renovation capex of about Rs. 40 crore per annum targeting 10% of inventory to increase ARR significantly.
- Expansion to double ‘Flurys’ outlets from 83 currently to about 350 over five years, including new outlets in Mumbai, West Bengal, Hyderabad, and Delhi.
- Ongoing development projects totaling 15 lakh sq. ft., including major projects at E M Bypass Kolkata (6 lakh sq. ft. JV with Ambuja Neotia Group), Pune, Vishakhapatnam, and Navi Mumbai.
- Addition of 232 new keys in FY24 and FY25, including three new lease properties with 116 rooms coming soon.
- Hotel development cost approximately Rs. 1 crore per key in the upper-upscale segment, aiming for efficient spending.
- Focus on asset-light growth via management contracts and leases with about 1,300 keys to be added through these models in five years.
- Strong balance sheet and net cash-positive status to support both inorganic and organic growth opportunities.
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Margin guidance
Category 2- Expectation of strong double-digit growth in the next financial year, in the range of 12-14%, driven by both ARR and occupancy growth.
- EBITDA margin expected to improve by 100-200 basis points going forward from the current 37%.
- Profits (PAT) have shown a 46% year-on-year improvement in Q3 FY24, indicating strong earnings growth momentum.
- Expansion plans include doubling inventory from ~2,300 keys to ~4,600 keys over the next five years, with significant contributions from asset-light models (management contracts and leases).
- Addition of 232 new keys in FY24 and FY25, along with launching and expanding ‘Flurys’ outlets, is expected to boost revenues and EBITDA.
- Renovation/upgradation of 10% of inventory planned to increase blended ARR and profitability.
- Financial cost expected to reduce to zero from Q1 FY25 due to debt repayment, positively impacting profitability and EPS.
Order book
- The company has initiated several expansion projects embedded in their balance sheet covering about 1.5 million square feet.
- A significant joint venture development agreement signed for a large 6 lakh square feet project on E M Bypass, Kolkata, with Ambuja Neotia Group.
- Plans include prioritizing development and expansion of existing land banks in Pune, Kolkata (E M Bypass), Jaipur, and capacity expansions in Vishakhapatnam and Navi Mumbai.
- Expansion involves doubling inventory from approximately 2,300 keys to around 4,600 keys over the next five years.
- Approximately 1,300 keys growth targeted through asset-light models like management contracts and leases across all brands.
- Multiple projects are progressing well towards commissioning, with Digha expected to open imminently and Patiala and Chettinad projects targeted for Q1 FY25.
- ‘Flurys’ outlets planned to increase from 75 to 83 by March end, with a further doubling planned over the next year.
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