Buy Chalet Hotels; target of Rs 1123: ICICI Securities

ICICI Securities's research report on Chalet Hotels

Chalet Hotels (CHALET)’s Q2FY26 hospitality revenue/EBITDA grew 13%/10% YoY, as new hotel openings impacted margins. The company expects robust demand in H2FY26 to flow into earnings. It has also announced the introduction of its own brand ‘Athiva’, a new-age premium hospitality brand that is slated to initially have 6 hotels with 900+ keys. With CHALET’s operational hotel portfolio to grow by 1,371 keys to 4,564 keys by Mar’28E and office leasing traction,
we estimate 16%/21% revenue/EBITDA CAGRs over FY25–28 (ex-residential). We retain BUY with a revised SoTP based TP of INR 1,123 (earlier INR 1,058) as we roll forward to Sep’27E valuation (earlier Mar’27E), valuing the company at 23x hotel EV/EBITDA. Key risks: Slowdown in hotel demand and office leasing.

Outlook

We retain BUY with a revised SoTP-based TP of INR 1,123 (earlier INR 1,058), as we roll forward to Sep’27E valuation (earlier Mar’27E), valuing the company at 23x EV/EBITDA, 8% cap rate for rental assets and residual value of Vivarea, Bengaluru residential project.