ICICI Securities research report on Chalet Hotels
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 this is the right strategy in an industry upcycle (FY23-FY28E) and we estimate hotel EBITDA CAGR of 18% over FY23-26E at EBITDA margins of 44-45%.
Outlook
We retain our BUY rating with an unchanged SOTP based target price of INR652/share. We value the company on Sep’25E SOTP basis at 18x EV/EBITDA for hotel business, 8% cap rate for rental assets and residual value of Vivarea, Bengaluru residential and office projects. Key risks are fall in hotel RevPARs and weak office leasing.
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