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Evolving into a brand play

Quick Pointers:

* Launched own brand ATHIVA. Over time, 6 hotels with 900 keys will be launched under the new brand.

* Declared maiden interim dividend of Rs1 per share.

In 2QFY26, CHALET IN recognized residential revenues of Rs2,821mn with EBITDA margin of 38.0% and consequently reported results are not comparable on YoY basis or with our estimates. Excluding the residential business, CHALET IN’s operating performance was broadly in-line with our estimates with EBITDA margin of 41.0% (PLe 40.8%) aided by 4.6% growth in RevPAR and strong traction in leasing income. With launch of own brand ATHIVA, CHALET IN has transitioned into being a brand owner thereby reducing dependency on third party operators. The move will not only help save on loyalty fees but also opens a new business opportunity to expand via management contract route. The inventory expansion goal is pretty much on track with plans to add 30/390 rooms at Khandala/Delhi in the near term. Even annuity business has started gaining traction (77% occupancy in 2QFY26) with an expected monthly exit rental run-rate of Rs300mn by Mar-26E providing necessary cushion to cash flows. We broadly retain our estimates and expect sales/EBITDA CAGR of 17%/21% over FY25-FY28E. Retain BUY” with a TP of Rs1,183 as we value the hotel business at 24x Sep-27E EBITDA (no change in target multiple), annuity portfolio at a cap rate of 8.5% and the residential project at NAV of Rs17 per share.

RevPAR grew 4.6% YoY: Topline increased by 95.0% YoY to Rs7,353mn. However, excluding residential business, revenue increased 22.2% YoY to Rs4,609mn (PLe Rs4,587mn). Hospitality revenue was up 13.4% YoY to Rs3,802mn (PLe Rs3,857mn) while annuity revenue was up 76.2% YoY to Rs738mn (PLe Rs730mn). ARR increased 15.6% YoY to Rs12,170. RevPAR grew 4.6% YoY to Rs8,115 while occupancy stood at 67.0%.

EBITDA margin (adjusted for residential business) stood at 41.0%: EBITDA increased by 100.1% YoY to Rs2,992mn aided by contribution from the residential business. However, core business EBITDA (adjusted for residential business) increased 26.4% YoY to Rs1,889mn (PLe Rs1,872mn) with a margin of 41.0% (PLe 40.8%). Hospitality/annuity EBITDA stood at Rs1,521mn/Rs607mn with a margin of 40.0%/82.3% respectively.

PBT of core business increases 19.2% YoY: PBT (excluding residential business) increased 19.2% YoY to Rs947mn (PLe Rs973mn) with a margin of 20.5% (PLe 21.2%). As residential income was recorded this quarter and is taxable, PAT comparison is not a like-for-like indicator.

Con-call highlights: 1) ATHIVA’s positioning will be at a premium/upper-upscale end. In terms of hierarchy, positioning is expected to be similar to Marriott, Taj, Hyatt Regency and Hilton. 2) Occupancy declined 700bps YoY to 67% in 2QFY26 impacted by heavy monsoons, seasonal softness at West-In Himalayas, and rampup of new inventory at Bengaluru. 3) Commercial portfolio occupancy stood at 77% in 2QFY26 and is expected to increase to 79% as new LOI’s have been signed during the quarter. 4) For the commercial annuity segment, exit rental run-rate was Rs245mn/month in Sep-25, with plans to reach ~Rs300mn/month by Mar-26. 5) 55 apartments at Vivarea, Koramangala (Bangalore) were handed over during 2QFY26. 6) As of Sep'25, 314 units have been sold from a total inventory of 321 units at Vivarea, Koramangala 7) Promoters had provided a cushion of Rs2bn towards Koramangala in the early stages and it has been fully repaid. 8) Capex of ~Rs25bn has been planned for next 3 years 9) Taj, DIAL is on track to open in 1HFY27E and Cignus II Tower, Powai by 4QFY27E. Construction at Athiva, Varca, South Goa is expected to begin in 4QFY26E.

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