Buy Chalet Hotels; target of Rs 1017: ICICI Securities

ICICI Securities research report on Chalet Hotels

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 estimate the hotel to reach stabilised occupancy of 65% in FY27E and generate EBITDA of INR 546mn in FY26E and INR 735mn in FY27E. Incorporating the Westin hotel earnings, we raise FY26/27E revenue and EBITDA by 6-7% and estimate hotel EBITDA CAGR of 19% over FY24-27E at EBITDA margin of 44-45%.

Outlook

Retain BUY with SoTP-based revised TP of INR 1,017 (earlier: INR 965), based on Mar’27E, incorporating Westin hotel, valuing CHALET at 23x EV/EBITDA, 8% cap rate for rental assets and residual value of Vivarea, Bengaluru residential project. Key risks: Slowdown in hotel demand and office leasing.