Buy Chalet Ltd for the Target Rs.920 by Choice Institutional Equities
Key Conference Call Highlights
Demand & Outlook:
* Domestic hospitality demand remained resilient despite geopolitical disruptions and aviation-related challenge, supported by weddings, MICE activity and rising discretionary spending
* February was strong across the portfolio, while March a saw sharp disruption due to West Asia tension, leading to cancellations and loss of ~9,000 FTA room nights
* The management indicated April was stronger than expected and May trends remained strong, while expecting recovery in H2FY27E
Industry & Positioning:
* The management highlighted that hotel supply continues to lag demand despite increased signings across brands
* Mumbai underperformed during Q4FY26, with ADR growth of 0– 2% and occupancy decline of 0–2%, versus India ADR growth of 6–8%
Growth Drivers:
* The management reiterated focus on scaling up the leisure portfolio, targeting ~20% revenue contribution from leisure over time
* Pipeline of ~1,655 keys across seven assets, taking the total portfolio to over 5,000 keys in the next 4–5 years
* Udaipur acquisition completed for INR 1.71 Bn for a 144-key resort, with plans for refurbishment and potential expansion
* Hyderabad project announced under the Ritz-Carlton brand with 330 keys; marking CHALET’s first ultra-luxury hotel. The hotel will operate on a warm-shell lease model, capex for fit outs estimates at ~INR 5.6 Bn
Operations & Trends:
* The management highlighted a strong growth potential from stabilisation of newer assets, including Bengaluru expansion, Athiva Khandala and Athiva V
* The management noted no material decline in domestic corporate demand despite weakness in FTAs, with group and MICE business helping offset some of the disruption
Commercial Real Estate & Residential:
* Monthly rental run-rate reached ~INR 280 Mn in March 2026 and is expected to increase to ~INR 300 Mn in FY27E
* Cignus 2 at Powai remains on track for completion around endFY27/early FY28 and is anticipated to materially increase annuity cash flows
* Residential business recognised revenue of INR 7.38 Bn in FY26, with Phase 2 handovers expected in FY27
* Commercial space within the residential project remains under development and will be leased out after completion
Financials & Balance Sheet:
* CHALET plans to invest ~INR 30 Bn across hospitality and commercial real estate projects over FY27–FY29E
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SEBI Registration no.: INZ 000160131
