While Brigade Hotel Ventures is an asset owner, its hotels are operated by global marquee hospitality companies such as Marriott, Accor and InterContinental Hotels Group. Notably, Brigade Hotel Ventures, via these labels, caters to the upper upscale, upscale, upper-midscale and midscale segments.
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ICICI Securities Report
We initiate coverage with a Buy rating on Brigade Hotel Ventures Ltd. with a target price of Rs 117. We value the company's operational hotels as of Sep'27E at an enterprise value of Rs 43.5 billion at 18x Sep'27E EV/Ebitda of Rs 2.4 billion (adjusted for 50% Chennai hotel share) – at a 20% discount to our target multiple of 23 times for peers such as Lemon Tree Hotels and Chalet Hotels, considering company's operational portfolio leans more towards upper upscale hotels.
As the company's premium/luxury hotels begin operations from FY28E, the Ebitda multiple may expand over time.
For the company's hotels set to open beyond FY28E, we add 1x capital work in progress of Rs 15.1 billion and reduce Sep'27E net debt of Rs 14.1 billion factoring in the capex required for these hotels. Hence, we arrive at a target equity value of Rs 44.5 billion or Rs 117/share.
Key risks:
Slowdown in hotel occupancies/ARRs and delay in execution of upcoming hotel assets.
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