Add Ventive Hospitality Ltd For Target Rs.720 by Choice Institutional Equities Ltd
Cost Pressure and Lower Occupancy Drag Premium Margin
The Maldives remains structurally exposed to energy price volatility due to its complete absolute reliance on diesel. The recent West Asia conflict underscored this vulnerability as fuel cost briefly rose to more than 2x pre-conflict levels. As geopolitical tension eases and tourist flows recover, we expect occupancy to improve in H2FY27E, supporting normalisation in operating margin. We continue to view the Maldives as the company's crown jewel, underpinned by premium resorts that maximize ancillary revenues through strong in-house F&B capture and high guest spend. With a favourable mix of high-value international travellers and limited supply, we expect the Maldives portfolio to remain the key contributor to earnings growth
View and Valuation
We revise our FY28E revenue estimate downwards by 11.3%, which was caused by a delay in commissioning of the resort and residential villas at Pottuvil, Sri Lanka. Consequently, we lower our EBITDA estimate by 11.3% for FY28E. We, however, continue to value the company using the SOTP approach on FY28E Adj. EBITDA, applying 16.0x for hospitality and 14.0x for annuity business (15.1x blended) to arrive at a TP of INR 720 (vs. 790). Given an upside of 15.9%, we assign an ‘ADD’ rating to the stock.
Pipeline Strengthens with 80+ Keys Ritz-Carlton Reserve
The Board approved the merger of Sun Leisure into Soham Leisure Ventures, streamlining the hospitality business, alongside INR-600 Mn captive solar investment to structurally lower energy costs. Net Debt/EBITDA of 1.2x keeps the balance sheet firmly in expansion mode. Medium-term tailwinds remain intact: The ~INR-2,810 Mn acquisition adds over 80-key Ritz-Carlton Reserve in Maharashtra, taking VENTIVE’s pipeline to over 1,700 key
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SEBI Registration no.: INZ 000160131
