Chalet Hotels Q4 Results Review: Nirmal Bang Maintains 'Buy', Hikes Target Price Post Strong Quarter

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Nirmal Bang Report

Chalet Hotels Ltd. reported an Ebitda/profit before tax beat of 10%/26% versus our estimates with numbers also surpassing consensus expectations. The outperformance was led by a 254bps YoY Ebitda margin expansion, supported by robust Meetings, Incentives, Conferences, and Exhibitions traction, average room rate-led growth, and tight cost controls across key micro-markets, reflecting strong operating leverage and execution efficiency.

In Q4 FY25, ADR growth in key metro clusters drove 27% YoY growth in room revenue, while food and beverage revenue rose 6% YoY. This shift improved the room revenue mix to 66% vs 62% in Q4 FY24, leading to a 70 bps YoY margin uptick for the hospitality segment. The increased share of high-margin room revenue played a key role in driving blended profitability.

We expect Chalet to maintain its growth trajectory over FY25-FY27E, led by incremental room inventory with higher occupancy, ARR growth, and scale-up in the annuity leasing portfolio.

We model revenue/Ebitda/PBT CAGR of 26%/29%/44% and anticipate ROCE expansion from 11% in FY25 to 13-16% by FY27E. We assign 26x FY27E Ebitda to the hospitality segment, translating to a target price of Rs 1,019, implying 20x on consolidated FY27E Ebitda (three years average of one-year forward EV/Ebitda at 21 times).

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