Are Apeejay Surrendra Park Hotels Ltd latest results good or bad?

Apeejay Surrendra Park Hotels Ltd's latest financial results for Q2 FY26 reveal a complex operational landscape. The company achieved net sales of ₹165.39 crores, reflecting a year-on-year revenue growth of 16.83% and a sequential improvement of 7.22% from the previous quarter. This growth indicates a positive trend in occupancy rates and average room rates across its hotel portfolio. However, the bottom line presents a contrasting picture. The net profit for the quarter stood at ₹16.20 crores, which represents a significant year-on-year decline of 39.44%. This decline in profitability is attributed to several factors, including rising operational costs, elevated interest expenses, and a notably high tax rate of 41.71%, which has exerted pressure on profit margins. The PAT margin contracted sharply to 9.80%, down from 18.90% in the same quarter last year, highlighting the challenges in maintaining profitability despite revenue growth. The operating margin also faced compression, decreasing to 29.63%, down 48 basis points from the previous year. The increase in employee costs and a contraction in gross profit margin to 27.49% further underscore the cost pressures the company is experiencing in the hospitality sector. In terms of financial health, the company maintains a conservative balance sheet with a low debt-to-equity ratio of 0.07, indicating manageable leverage. However, the recent increase in long-term debt raises questions about future financial flexibility. Overall, while Apeejay Surrendra Park Hotels Ltd has demonstrated strong revenue growth, the substantial decline in net profit and margin compression signal operational challenges that need to be addressed. The company has seen an adjustment in its evaluation, reflecting these mixed results and the ongoing concerns regarding profitability sustainability. Investors may want to closely monitor future trends in margin recovery and operational efficiency as the company navigates these challenges.