Accumulate Chalet Hotels Ltd., target price Rs 850: Emkay Global Financial Services
![](https://m.economictimes.com/thumb/height-450,width-600,imgsize-539528,msid-110142962/hotel.jpg)
Synopsis
We cut FY25E/26E EBITDA by 1.6%/4.2% on margin miss. We maintain our ADD recommendation on Chalet, with SOTP-based TP of Rs850/share vs. Rs900/share earlier (SOTPbased Mar-26E EV/EBITDA of 20.5x for hotels and of 16x for rental assets).
Chalet Hotels Ltd. key Products/Revenue Segments include Income from Rooms, Restaurants & Other Services, Lease Rentals and Other Services for the year ending 31-Mar-2023.
Investment Rationale
Chalet’s Q4 revenue/EBITDA/adj. EBITDA growth was healthy at 24%/20%/25% YoY. Revenue was in line, though there was miss on margin due to higher other expenses. We see Chalet charting an EBITDA CAGR of 31% over FY24-
26E and its net debt reducing further over FY25-FY26E as it initiates a slew of expansion projects, which would engender a 9% room-count CAGR over FY24- 26E.
Demand is likely to outstrip supply for the next 2-3 years, leading to further improvement in ARR. Leasing of commercial assets provides partial hedge against cyclicality of the hospitality industry. We cut FY25E/26E EBITDA by 1.6%/4.2% on margin miss. We maintain our ADD recommendation on Chalet, with SOTP-based TP of Rs850/share vs. Rs900/share earlier (SOTPbased Mar-26E EV/EBITDA of 20.5x for hotels and of 16x for rental assets).
For the quarter ended 31-03-2024, the company has reported a Consolidated Total Income of Rs 424.41 Crore, up 11.72 % from last quarter Total Income of Rs 379.89 Crore and up 22.74 % from last year same quarter Total Income of Rs 345.78 Crore. Company has reported net profit after tax of Rs 82.44 Crore in latest quarter.
Stocks Recommendations
The company?s top management includes Mr.Hetal Gandhi, Mr.Sanjay Sethi, Mr.Neel C Raheja, Mr.Ravi C Raheja, Mr.Arthur William De Haast, Ms.Radhika Piramal, Mr.Joseph Conrad D?Souza. Company has B S R & Co. LLP as its auditors. As on 31-03-2024, the company has a total of 21 Crore shares outstanding.
Promoter/FII Holdings
Promoters held 71.67 per cent stake in the company as of 31-Mar-2024, while FIIs owned 4.24 per cent, DIIs 19.61 per cent.
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