Brokerage house, Anand Rathi Share and Stock Brokers Ltd, has initiated coverage on Apeejay Surrendra Park Hotels (Park Hotels) with a ‘buy’ rating and a price target of ₹285, anticipating over 28% upside from the current levels.
On Friday’s session, the recently listed Apeejay Surrendra Park Hotels stock started on a positive note and made a new fresh high in the morning session; however, analysts have now seen some profit booking as prices are trading at the low point of the day with a cut of 2%.
Brokerage firm Anand Rathi believes Apeejay Surrendra Park Hotels to have industry-leading occupancy with attractive valuations.
The brokerage’s report stated that Park Hotels operates thirty hotels (seven owned, three leased, and twenty under management contract) with 2,298 rooms (~1,280/~1018 owned & leased/MC) in luxury categories, including boutique upscale (The Park, The Park Collection) and upper midscale (Zone by the Park, Zone Connect by the Park), all of which are situated in prime business districts. Its occupancy rate is the highest in the sector.
Its pricing strategy, which involves offering rooms at a premium compared to competitors, together with a carefully thought-out expansion plan and fair valuation, bode well for the company (selling at 50%/10%/33% discounts to Indian Hotels/Lemon Tree/Chalet Hotels), the brokerage highlighted in its report.
“Multi brands, prime locations, industry-leading occupancy, competitive average room rate (ARR) augur well. The company’s hotel portfolio is diversified across categories luxury and upscale through The Park brand, and upper mid-market through Zone by the Park. Hence, we initiate coverage on the stock with a Buy and a 12-month target price of ₹285 (valuing it at 18x FY26 EV/EBITDA, giving 35%/20%/10% discounts from Indian Hotels/Chalet Hotels/Lemon Tree),” the brokerage said.
High contingent liabilities and a slowing economy are two of the risks that the brokerage recognised.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
