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Dolat Capital Report
Chalet Hotels Ltd.'s Q2 FY24 was marginally below our but in-line with street estimates, yet healthy. Revenue/Ebitda/adjusted profit after tax grew by a robust 27/49/125% YoY. Hotel business revenue/Ebitda grew by 27/58% YoY.
Chalet is poised for a strong revenue/Ebitda/adjusted profit after tax compound annual growth rate of 20/27/43% over FY23-26E on account of-
Increase in hotel rooms (~200 in FY26),
revival of foreign travel,
double-digit average room rate growth and
office portfolio to become ~4.5 times (0.5 to 2.2 million square feet) driving the segment Ebitda contribution three times (Rs 0.8 billion to ~Rs 2.3 billion).
The above makes Chalet an attractive growth and re-rating play. Partially this has played out. As delivery happens on above we expect the compounding to continue. But, increased competition in core Mumbai city is a key risk and monitorable.
We ascribe 15 times enterprise value/Ebitda to commercial portfolio and 18 times EV/Ebitda to Hotel business (versus 22 times for Indian Hotels Company Ltd.), blended EV/Ebitda is ~17.2 times.
Reiterate 'Accumulate' with target price of Rs 610 at FY26E EV/Ebitda (earlier Rs 520 at FY25E EV/Ebitda).
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