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Mixed Performance amid Geopolitical and MMR Disruption

Hospitality revenue grew 9.5% YoY to INR 4.2 Bn, supported by an 8.5% increase in ARR to INR 13,247 and 6.5% growth in RevPAR, despite occupancy moderating 120 bps YoY to 64.8%. Occupancy remained impacted by the West Asia conflict, which led to lower crew and foreign business demand, along with ongoing construction and renovation activities across the Mumbai Metropolitan Region (MMR) portfolio. However, CHALET’s leisure portfolio remained resilient, supported by a healthy domestic travel and wedding demand. The rental annuity business continued to deliver strong double-digit growth, driving ex-residential EBITDA growth of 13.7% YoY to INR 2.5 Bn and margin expansion of 122 bps YoY to 49.9%. This reflects operating leverage across the hospitality and annuity businesses. Consolidated PAT declined 58% YoY to INR 861 Mn, primarily due to lower residential revenue recognition and a one-time voluntary separation scheme (VSS) expense

View and Valuation

We carry forward our previous estimate with marginal changes and bake in a Revenue / EBITDA / PAT CAGR of 8.3% / 12.2% / 13.3%, respectively. We believe that disciplined execution, stabilisation of leisure assets and scaling up of the annuity occupancy will lead to ROCE improving from 16.5% in FY26 to 18.0% by FY29E. We, therefore, apply an EV/EBITDA multiple of 18.0x (maintained) to the hospitality business and 14.0x to the annuity business, arriving at a target price of INR 920, thus assigning an 'ADD' rating

Higher ARRs Offset Soft Occupancy; Margin in Line with CIE est

* RevPAR grew 6.5% YoY to INR 8,582, driven by ARR growth of 8.5%, while occupancy dropped to 64.8% (versus 66% in Q1FY26)

* Net revenue (ex-residential) increased by 10.9% to INR 5,050 Mn led by 9.5% growth in hospitality business

* EBITDA stood at INR 2,340 Mn (vs. CIE estimate of INR 2,202 Mn), led by growth in Annuity occupancy. EBITDA margin came in line with our expectation at 45.7%

* Consolidated PAT came in at INR 861 Mn (vs. CIE estimate of INR 896 Mn) with net profit margin of 16.8%, impacted by exceptional expense

* Lease occupancy improved, from 87.1% in Q4FY26 to 90.6% with monthly run-rate at INR 288 Mn (vs. INR 282 in Q4FY26)

Pipeline Execution Remains on Track; Athiva Gains Traction

CHALET’s development pipeline remains on track, with key projects including Taj Delhi Airport, Cignus II Powai, Ritz-Carlton Hyderabad and Hyatt Regency Airoli progressing as planned. The company also approved the acquisition of Seasons Hotels (Inder Residency Resort & Spa, Udaipur) for INR 1,710 Mn, adding a 144- room leisure asset and expanding its presence in high-growth leisure destination. The management highlighted encouraging customer response to its homegrown ‘Athiva’ brand, supporting its long-term expansion strategy

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