Chalet Hotels Limited — Q1 FY26 earnings call

Call held 1 Aug 2025

Management summary

Chalet Hotels delivered a strong Q1 FY26, marked by significant revenue and EBITDA growth across its consolidated and core businesses. The hospitality segment showed resilience with double-digit RevPAR growth despite external volatilities, while the commercial and residential segments also contributed substantially. The company is progressing on its expansion pipeline and maintains a healthy balance sheet for future growth.

Highlights

  • Consolidated revenue surged 146% YoY to INR 9.1 billion.

  • Consolidated EBITDA grew 150% YoY to INR 3.7 billion, with margins expanding 70 bps to 40.9%.

  • Core revenues (ex-residential) grew 27% YoY to INR 4.7 billion, and core EBITDA grew 37% to INR 2.1 billion.

  • Hospitality segment revenue increased 18% YoY to INR 3.9 billion, with EBITDA margin at 41.7% (up 50 bps).

  • RevPAR improved 10% to INR 8,059, driven by a 17% increase in ADR to INR 12,207.

  • Rental and annuity portfolio revenue rose 106% YoY to INR 732 million, achieving an 83.1% EBITDA margin.

  • Net debt stood at INR 20.2 billion, with average cost of finance contracting 40 bps QoQ to 8%.

  • The Vivarea residential project recognized INR 4.4 billion in revenue from 95 handed-over units.

Concerns

  • External Volatility and Geopolitical Tensions

Key financials

  1. Consolidated Revenue ₹9,100 Cr +146%YoY
  2. Consolidated EBITDA ₹3,700 Cr +150%YoY
  3. Consolidated EBITDA Margin 40.9%
  4. Core Revenue (ex-residential) ₹4,700 Cr +27%YoY
  5. Core EBITDA (ex-residential) ₹2,100 Cr +37%YoY
  6. Core EBITDA Margin (ex-residential) 44.4%

What they filed

Q1 FY27: revenue down 42.8%, net profit down 57.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue377 458 522 895 735 +95%582 +27%558 +7%512 −43%
EBITDA150 205 241 357 299 +99%265 +29%266 +10%234 −34%
Net profit-139 97 124 203 155 +212%124 +28%163 +31%86 −58%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentRevenueEBITDAEBITDA Margin
Hospitality₹3,900 Cr₹1,600 Cr41.7%
Rental and Annuity₹732 Cr₹608 Cr83.1%
Residential (The Vivarea)———

Capital allocation

high confidence
  • Capex ₹20,000 Cr primarily funded through our internal accruals
    Under our current strategy, we have planned capex of INR20 billion by FY '27, primarily funded through our internal accruals.
  • Debt Net ₹20,200 Mn Cost 8%
    • Rate reset Average cost of finance contracting by 40 bps quarter-on-quarter to 8%
    • Repayment INR 40 crores of the INR 200 crores ring-fenced promoter loan paid in the current quarter. ₹400 Mn
    Our net debt stood at INR20.2 billion with the average cost of finance contracting by 40 bps quarter-on-quarter to 8%.
  • Liquidity Cash ₹3,200 Mn Maintained a healthy liquidity position.
    We maintained a healthy liquidity position of INR3.2 billion at the end of the quarter.

Guidance & targets

Capacity

  • Total Room Inventory Capacity · current financial year · High confidence 5,000 rooms
    I see no reason why our pipeline plus operating hotels will not cross the 5,000 marks in the current financial year itself.

    — Sanjay Sethi

Profitability

  • RevPAR Growth Profitability · next 3 to 4 years · High confidence 10% and double-digit
    I absolutely hold our belief that 10% and in fact, double-digit RevPAR growth is pretty much given for the next few years. And I'm very confident this will happen for the next 3 to 4 years, at least.

    — Sanjay Sethi

Residential Sales

  • Revenue Recognition (The Vivarea) Residential Sales · next quarter · High confidence 58 units
    Revenue from another 58 units will be recognized in the next quarter.

    — Nitin Khanna

  • Revenue Recognition (The Vivarea) Residential Sales · remainder of FY26 · High confidence No further revenue recognition
    We do not anticipate any further revenue recognition for the remainder of the financial year, which is FY '26.

    — Nitin Khanna

  • Next set of apartments handover Residential Sales · next financial year (FY27) · High confidence Ready for handover
    The next set of apartments would be ready for handover in the next financial year, which is FY '27.

    — Nitin Khanna

  • Net Exit Value (The Vivarea) Residential Sales · within next 24 months · High confidence INR 4 billion to INR 4.5 billion
    We remain confident of delivering INR4 billion to INR4.5 billion on net exit from this project within next 24 months, including the strata sale of the commercial tower measuring 0.15 million square feet.

    — Nitin Khanna

Commercial Real Estate

  • Occupancy (Rental and Annuity) Commercial Real Estate · coming quarters · High confidence Around 90%
    We are expecting to land somewhere around 90% occupancies in the coming quarters.

    — Nitin Khanna

Debt

  • Net Debt to EBITDA Ratio Debt · High confidence Within 3.5x
    we would like to stay within the 3.5x multiple of EBITDA when it comes to debt.

    — Shwetank Singh

What to watch in Q2 FY26

The Vivarea Residential Revenue Recognition

next quarter (Q2 FY26)
Current 95 units recognized in Q1 FY26 (INR 4.4 billion revenue)
Target Revenue recognition from another 58 units

Why it matters

Important for realizing the full value of the residential project and its contribution to consolidated financials.

Revenue from another 58 units will be recognized in the next quarter.

Risks & concerns

  • External Volatility and Geopolitical Tensions

    high

    Geopolitical tensions, airspace closures, and an aviation accident caused significant disruptions across the travel ecosystem in May.

    Management acknowledged

  • New Supply in Micro-Markets

    medium

    Opening of new supply (e.g., Fairmont) in the MMR market has had a slight impact on occupancy, particularly for JW Sahar.

    Management acknowledged

  • Regulatory Hurdles for Project Development

    medium

    NGT laws caused delays for the Airoli project, and the Trivandrum hotel requires lease document signing and other steps.

    Management acknowledged

  • Cyclicality of the Hotel Industry

    medium

    Analyst raised concerns about the sector's cyclicality after a 5-year upcycle and potential impact of new supply; management expressed confidence in sustained growth for 3-4 years.

    Analyst downplayed

Q&A highlights

7 direct
Growth and Pipeline for Room Inventory Direct
Look, we've got about 3,300 rooms, which are currently operational, a little over 3,300 actually. We have about 1,200 rooms which are in the pipeline... I see no reason why our pipeline plus operating hotels will not cross the 5,000 marks in the current financial year itself.

Provides clear targets for room inventory expansion and management's confidence in achieving 5,000 rooms by FY26.

Asked by Vikas from Antique Stock Broking

MMR Occupancy Drop and Southern Markets Performance Direct
what's happened in MMR is there is no doubt that the opening of new supply in the micro market of where the Sahar hotel is has had an impact, and -- but it's a slight impact... As far as Powai performance is concerned, we see it only as a minor blip for now and we expect that to improve in the next quarter itself.

Addresses specific market performance, competitive pressures from new supply, and expectations for recovery in key micro-markets.

Asked by Vikas from Antique Stock Broking

Funding Strategy for Large Acquisitions Direct
as far as the acquisition is concerned, we are very well capitalized. We are always on the lookout for suitable opportunities. If you look at our debt levels, we are very comfortable and well within the range of 3.5x EBITDA which is the benchmark that we internally hold to sort of keep checking ourselves.

Clarifies the company's capital allocation strategy for inorganic growth and its comfort level with current debt metrics.

Asked by Vikas from Antique Stock Broking

Residential Project Cash Flow and Promoter Loan Repayment Direct
So you're right. So there was a INR200 crores ring-fencing, which was done by the promoters during the IPO, out of which INR40 crores we have already paid in the current quarter. And with cash flows getting improved in the coming quarter, we will pay as per our commitment.

Provides transparency on the utilization of cash flows from the residential project and the repayment schedule for promoter loans.

Asked by Jinesh Joshi

ARR/Occupancy Trade-off and RevPAR Growth vs. Peers Partial
in a quarter where we had, after many years, a conflict between India and Pakistan, which is material in nature. There was air disruption on account of the conflict. There were air disruptions in the West Asia region... Despite that, we've delivered this.

Addresses concerns about RevPAR performance relative to peers by highlighting significant external geopolitical and aviation disruptions impacting the travel ecosystem.

Asked by Karan Khanna from AMBIT Capital

Cyclicality of Hotel Sector and Long-term RevPAR Growth Direct
I absolutely hold our belief that 10% and in fact, double-digit RevPAR growth is pretty much given for the next few years. And I'm very confident this will happen for the next 3 to 4 years, at least.

Offers management's long-term outlook on sustained double-digit RevPAR growth, despite concerns about industry cyclicality and new supply.

Asked by Karan Khanna from AMBIT Capital

Delays in Project Pipeline and Trivandrum Hotel Construction Direct
it has been challenging to move forward Airoli because of the NGT laws that changed... In terms of Trivandrum, there are still a few steps left before we can actually start executing this project. The main one being the signing of a lease document with the government.

Highlights specific regulatory and administrative hurdles impacting the organic growth pipeline and project timelines.

Asked by Prashant Biyani from Elara Capital

JW Sahar Occupancy Strategy and Airline Business Contribution Direct
there is no reason to cut rates or there is no reason to sort of take a very hard stance on that. The way we look at it is we need to maximize our revenues through a RevPAR strategy at all times... the contract segment, which includes the airline crew business, in quarter 1 '26 was roughly 11% of the total room nights that were occupied.

Clarifies the pricing strategy for a key Mumbai asset and provides insight into the contribution of a specific demand segment (airline crew).

Asked by Nikhil Poptani

2 min read 6 chapters

Detailed narrative

Q1 FY26 Consolidated and Core Business Performance

Chalet Hotels reported a robust Q1 FY26, with consolidated revenue surging 146% year-on-year to INR 9.1 billion and consolidated EBITDA growing 150% to INR 3.7 billion. The consolidated EBITDA margin expanded by 70 basis points to 40.9%. Excluding the residential project, core revenues (hospitality and commercial real estate) grew 27% year-on-year to INR 4.7 billion, with core EBITDA increasing 37% to INR 2.1 billion, and core EBITDA margin expanding 330 basis points to 44.4%.

Hospitality Segment Resilience and Growth Drivers

The hospitality segment's revenue grew 18% year-on-year to INR 3.9 billion, achieving an EBITDA of INR 1.6 billion (up 20% YoY) and a margin of 41.7%. RevPAR increased by 10% to INR 8,059, primarily driven by a 17% rise in ADR to INR 12,207. Despite a 4.4 percentage point decline in overall occupancy to 66% due to new inventory and external disruptions, the company maintained strong rate performance, particularly in Bengaluru and Hyderabad markets.

Commercial and Residential Real Estate Contributions

The rental and annuity portfolio demonstrated strong growth, with revenue rising 106% year-on-year to INR 732 million and EBITDA increasing 130% to INR 608 million, yielding an impressive 83.1% EBITDA margin. Committed leasing for the commercial portfolio stands at 77%, with an expectation to reach around 90% occupancy in coming quarters. The Vivarea residential project in Koramangala recognized INR 4.4 billion in revenue from the handover of 95 units, contributing INR 1.6 billion to EBITDA.

Expansion Pipeline and New Inventory Additions

Chalet Hotels added 165 keys year-to-date, expanding its inventory by 5%. This included 121 rooms at Marriott Whitefield, Bengaluru, bringing its total to 512, with a final count of 520 rooms expected shortly. The Dukes Retreat in Khandala added 44 rooms, with 30 more to be completed soon, bringing the resort to 147 keys. Construction for the Delhi Airport hotel is on track for opening next year, and the CIGNUS II office tower is scheduled for completion in FY '27.

Capital Structure and Funding Strategy

The company's net debt stood at INR 20.2 billion, with the average cost of finance contracting by 40 basis points quarter-on-quarter to 8%. Chalet maintains a healthy liquidity position of INR 3.2 billion. A planned capex of INR 20 billion by FY '27 is primarily funded through internal accruals. The management aims to keep net debt to EBITDA within a 3.5x multiple and is well-capitalized to pursue both organic and inorganic growth opportunities.

Leadership Transition and Future Outlook

Dr. Sanjay Sethi announced his decision to step down as MD & CEO by January 31, 2026, with Mr. Shwetank Singh designated as his successor. The transition is part of a meticulous succession plan aimed at preserving strategic direction while infusing fresh energy. Management expressed confidence in achieving 5,000 rooms by the current financial year and maintaining double-digit RevPAR growth for the next 3-4 years, driven by a strong travel ecosystem in India.

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