News
Chalet Hotels Q3 Results Review – Risk-Reward Turning Unfavorable!: Dolat Capital
NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Dolat Capital Report
Chalet Hotel Ltd. Q3 FY24 was healthy driven by robust 18% RevPAR growth YoY (est 14%), higher other income and lower tax. Revenue/Ebitda/APAT grew by 29/46/74% YoY. Key hotel segment revenue/Ebitda was +29/50% YoY.
Chalet is poised for a strong revenue/Ebitda/APAT compound annual growth rate of 16/20/45% over FY24-26E led by
- increase in hotel rooms by 7% (~200 in FY26)
- 5.5% RevPAR CAGR and
- office portfolio to become ~2 times (1.2 to 2.4mn sqft) driving the segment Ebitda ~3 times (Rs 0.8 billion to ~Rs 2.2 billion) and
- steep reduction in debt/ interest as we factor Rs 20 billion fund-raise at ~Rs 700/sh.
The above factor makes Chalet an attractive growth play. But, steep run up in share price (14/34/109% in trailing 1/3/12m) and increased competition in core Mumbai city are key risk. D/G to 'Sell' with revised target price of Rs 650 @ 12 times enterprise value/E to commercial and 20 times enterprise value/E to Hotel business (versus 22 times for Indian Hotels Company Ltd.), blended EV/E is ~18 times FY26E(Rs 610@FY26E EV/E)
Source: NDTV