JM Financial expects Chalet to report an EBITDA CAGR of 21 percent over FY18-21E
Chalet Hotels shares rallied 4.5 percent intraday on March 19 after brokerage house JM Financial initiated coverage with a buy call on the stock.
The stock was quoting at Rs 322.35, up Rs 9.05, or 2.89 percent on the BSE, at 1124 hours IST.
Chalet Hotels is the asset owner and manager of five high-end hotels with 2,328 keys across three metros. The assets are operated by Marriott.
Chalet's EBITDA margin of 35 percent and occupancy of 75 percent is superior to industry and is a testimony to the success of its asset management strategy, JM Financial said, adding Chalet, with its high-end hotels is well placed to benefit from the imminent up-cycle in the industry.
In addition, its upcoming 588 keys and 1.12 million square feet (msf) of commercial space will help drive growth going forward, the brokerage believes.
"We are factoring in an average room rate (ARR) growth of 7-8 percent for hotel operations and exit cap rate of 8 percent for commercial assets," JM Financial said.
It expects Chalet to report an EBITDA CAGR of 21 percent over FY18-21E.
The brokerage initiated with buy with a price target of Rs 400 (March 2020) at an implied EV/EBITDA of 15.4x and cap rate of 8.3 percent on FY21 for operational hospitality and commercial assets respectively.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.