Chalet Hotels Ltd. share price target

Chalet Hotels (CHALET) delivered in-line Q2FY24 revenue of INR3.1bn and adjusted EBITDA of INR1.3bn with RevPAR growing 25% YoY to INR7,034. Wile industry peers are focusing on the asset light expansion route, Chalet has chosen to grow its hotel room and office rental portfolio over FY23-27E through the ownership route (mix of existing project expansion and long-term leases).

We believe that Chalet Hotels (Chalet) is well poised to benefit from the strength in demand, especially for premium and luxury hotels in India’s Tier cities. While industry peers are focusing on the asset light expansion route, Chalet has chosen to grow its hotel room and office rental portfolio over FY23-27E through the ownership route (mix of existing project expansion and long-term leases).

Chalet Hotels (CHALET) delivered in-line Q1FY24 revenue of INR3.1bn and adjusted EBITDA of INR1.3bn with RevPAR growing 24% YoY to INR7,182. While industry peers are focusing on the asset light expansion route, Chalet has chosen to grow its hotel room and office rental portfolio over FY23-27E through the ownership route (mix of existing project expansion and long-term leases).

We initiate coverage on Chalet Hotels Ltd. (Chalet) with a BUY rating and an SOTP- based target price of Rs603/share. We value the company on Jun’25 SOTP basis at 18x EV/EBITDA for hotel business, 9% cap rate for rental assets and residual value of Vivarea, Bengaluru project.