Broker’s call: Chalet Hotels (Buy)

Target: ₹1,039

CMP: ₹765.90

Chalet Hotels reported in-line Q3, with slight miss on profitability due to higher-than-expected depreciation and interest costs. Segmental financials are largely in line for both hospitality and commercial lease rental segments. Chalet reported ₹96.50 crore profit at the PAT level versus our estimate of ₹110 crore profit.

We remain structurally positive on Chalet, given visibility on healthy room addition till FY29. Healthy cash generation FY25 onwards will give it gunpowder to harness inorganic growth opportunities.

Mumbai Metropolitan Region (MMR) revenue contribution dropped from 63 per cent to 56 per cent, reflecting a strategic diversification towards other key markets, with Hyderabad and NCR markets offsetting the dip. ADR in MMR grew 13 per cent y-o-y to ₹12,972, underscoring strong pricing power, while occupancy declined 400bps to 74 per cent, as Chalet let go off some low-paying clients.

We reiterate Buy with a lower target price of ₹1,039. With strong cash generation from FY25, we expect Chalet to pursue inorganic growth opportunities. Strong promoter pedigree – the Raheja Group – ensures operational expertise, management bandwidth and financial flexibility. Chalet’s tie-ups with global brands ensure continued high occupancy and healthy ARR.