Chalet Hotels Ltd. share price target

CHALET reported better than expected performance with EBITDA margin of 46.3% (PLe 44.9%) aided by 21.4% growth in RevPAR and strong traction in leasing income. Apart from continuing momentum in RevPAR, near term growth in the hospitality business is likely to be driven by addition of ~450 keys at Khandala and Delhi over the next 2 years. Pipe-line for long term is stronger with plans to add new hotels in Goa, Airoli and Kerala which will take the total key count to ~4,500+ in next 4-5 years. Even the annuity business has started gaining traction with an expectation of reaching an occupancy of ~90% in next...

Chalet Hotels’ (Chalet) Q4FY25 revenue and EBITDA grew 20% and 22% YoY, respectively, led by 23% same-store RevPAR growth. For FY25 overall, hotel revenue grew 18% YoY to INR 15.2bn while EBITDA was up 19% to INR 6.8bn.

Chalet Hotels (CHALET) has announced the completion of the acquisition of 141 keys 5-star luxury hotel – The Westin Resort and Spa, Himalayas (TWRS) in Rishikesh at an acquisition cost of INR 5.3bn.

We maintain our BUY recommendation on the stock.

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.