Chalet Hotels Limited — Q4 FY25 earnings call

Call held 13 May 2025

Management summary

Chalet Hotels delivered its strongest year to date in FY25, marked by record revenues and profitability, driven by strong operating efficiencies and strategic acquisitions. The company reported significant growth across its hospitality and rental segments, with robust RevPAR and ARR increases. Despite geopolitical uncertainties and project delays in Airoli, Chalet is expanding its portfolio with new developments and acquisitions, maintaining a positive outlook for continued growth and margin expansion, supported by a strong balance sheet and focus on diversification.

Highlights

  • Consolidated revenue for Q4 FY25 stood at INR5.4 billion, a 27% growth YoY, crossing the INR5 billion milestone for the first time in a single quarter.

  • Consolidated EBITDA for Q4 FY25 was INR2.6 billion, a 36% growth YoY, with an EBITDA margin of 47.8%, the highest ever in any quarter.

  • Hospitality segment revenue for Q4 FY25 grew 20% to INR4.6 billion, with room revenue rising 27% YoY to INR3 billion.

  • Hospitality EBITDA for Q4 FY25 jumped 22% to INR2.2 billion, achieving a margin of 48.5%, up 60 basis points YoY.

  • Average Room Rate (ARR) reached INR14,345 (portfolio level), a robust 21% increase YoY, and RevPAR increased 21% to INR10,909, crossing the INR10,000 mark for the first time.

  • For FY25, Hospitality revenue stood at INR15.2 billion, and EBITDA climbed to an all-time high of INR6.8 billion, with a margin of 44.7%.

  • Acquired The Westin Resort & Spa, Himalaya for an enterprise value of INR5.3 billion in Q4, strengthening position in leisure, spiritual, and wellness markets.

  • Board approved definitive term sheet for acquiring 15-acre beachfront land in Bambolim, North Goa for developing approximately 170 room luxury hotel.

Key financials

2 periods

Q4

  • Consolidated Revenue
    ₹540 Cr
    YoY +27%
  • Consolidated EBITDA
    ₹260 Cr
    YoY +36%
  • Consolidated EBITDA Margin
    47.8%
  • Consolidated PAT
    ₹120 Cr
    YoY +50%

FY25

  • Hospitality Revenue
    ₹1,520 Cr
  • Hospitality EBITDA
    ₹680 Cr

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

SegmentRevenue (Q4)EBITDA (Q4)EBITDA Margin (Q4)
Hospitality Segment₹460 Cr₹220 Cr48.5%
Rental and Annuity Segment₹61.9 Cr₹49.8 Cr80%
Residential Projects———

Capital allocation

high confidence
  • Capex ₹2,300 Cr largely funded through internal accruals
    We have budgeted for capital expenditure under the current plan of around INR23 billion to be deployed over the next 3 years, which will be largely funded through internal accruals.
  • Debt Net ₹1,990 Cr Cost 8.4%
    • New borrowing Allotted listed non-convertible debentures (NCDs) at a coupon of 8.35%, rated AA- with stable outlook by CRISIL. ₹75 Cr
    • Rate reset Average cost of finance reduced by 47 bps from March '24.
    As on 31st March '25, the net debt of the company stood at INR19.9 billion. We maintained a liquidity position of INR3.6 billion in the books. ... Overall, we closed the quarter with an average cost of finance standing at 8.4%, a reduction of 47 bps from March '24.
  • M&A The Westin Resort & Spa, Himalaya Acquisition · Closed · Consideration ₹[object Object] (undisclosed)

    Strengthening position in the high growth leisure, spiritual and wellness market.

    In Q4, we acquired The Westin Resort & Spa, Himalaya for an enterprise value of INR5.3 billion, strengthening our position in the high growth leisure, spiritual and wellness market.
  • M&A 15 acre beachfront land in Bambolim, North Goa Acquisition · Announced

    Developing approximately 170 room luxury hotel, reflecting belief in Goa's long-term potential.

    I'm thrilled to announce today that our Board has approved a definitive term sheet for acquiring a 15 acre beachfront land in Bambolim, North Goa for developing approximately 170 room luxury hotel over there.
  • Liquidity Cash ₹360 Cr
    We maintained a liquidity position of INR3.6 billion in the books.

Guidance & targets

Project Completion

  • Dukes Retreat, Khandala completion Project Completion · H1 FY26 · High confidence within H1
    The Resort will ultimately have 145 keys upon completion, and we are working on ensuring we deliver 100% of the project within H1, hopefully earlier than the end of H1.

    — Sanjay Sethi

  • Taj Delhi Airport completion Project Completion · Q3 FY26 · High confidence early part of Q3 next year
    So we should sort of look at completing this maybe in early part of the quarter 3 of - next year

    — Sanjay Sethi

  • Luxury Beachfront Resort at Varca completion Project Completion · FY28 · High confidence FY '28
    Our Luxury Beachfront Resort at Varca remains on track and is scheduled for completion in FY '28.

    — Sanjay Sethi

  • Westin Powai Lake Complex CIGNUS 2 completion Project Completion · FY27 · High confidence FY '27
    The second commercial tower at Westin Powai Lake Complex CIGNUS 2 is progressing on schedule and is expected to be completed in FY '27.

    — Sanjay Sethi

Total Keys

  • Total operating and pipeline keys Total Keys · next year or so · High confidence 5,000
    We will keep our gunpowder dry on our balance sheet for any opportunities on acquisitions, whether they are mergers or acquisitions or greenfield land parcel acquisitions and will continue to grow at a pace to get us to that 5,000 room mark in the next, between operating and pipeline, in the next year or so.

    — Sanjay Sethi

Rental Annuity Occupancy

  • Committed leasing percentage Rental Annuity Occupancy · within 2-3 quarters · High confidence 90%+
    But you know we are within that 2 or 3 quarter range now. Roughly that will get to 90 plus percent.

    — Sanjay Sethi

Office Portfolio Income

  • Overall income from announced office pipeline Office Portfolio Income · Medium confidence north of INR450 crores
    And as we add more office assets we are hopeful that we will hit overall income north of INR450-odd crores from the announced pipeline of offices that we have.

    — Sanjay Sethi

Debt Management

  • Net Debt to EBITDA ratio Debt Management · High confidence below 3.5x, hopefully in 3 range
    But we are conscious of the fact that we would not like to be. We'd like to be south of 3.5x for sure. In fact hopefully in the 3 range.

    — Sanjay Sethi

Cost of Debt

  • Average cost of finance Cost of Debt · May end · High confidence 8.32%

    Previously 8.35% → 8.32%

    In April end, we are around 8.35%. We are also expecting some resets to set in the month of May as well. We are expecting May end will be around 8.32%.

    — Nitin Khanna

What to watch in Q1 FY26

Koramangala Project Revenue Recognition

Q1 FY26
Current Handover starting Q1 FY26, revenue recognition expected in current quarter.
Target Material revenue recognition from Koramangala project.

Why it matters

This project's revenue recognition is a key milestone for the residential segment and overall financial performance.

The actual handover possession is starting in the quarter one and probably by July we will be handing over possessions and recognizing revenue in our books as well.

Risks & concerns

  • Geopolitical volatility and its impact on business

    medium

    Recent border situation led to 9% shortfall from internal targets for May month-to-date and some MICE cancellations, affecting 11 days of business.

    Management acknowledged

  • Regulatory delays for projects (NGT regulations)

    medium

    Airoli project faces unexpected delays due to changes in NGT regulations requiring central government approvals for projects within 5 km of national parks, impacting about 200 projects in Mumbai.

    Management acknowledged

  • Seasonality in leisure destinations

    low

    Rishikesh, while a year-round destination, experiences a drop in business during the heavy rainy season for a couple of months.

    Management acknowledged

Q&A highlights

7 direct
Impact of geopolitical developments on business Direct
Basically, we are trending in May month-to-date at 12% growth over last year. But we are -- from our internal targets, about 9% below the number that we had set ourselves to do when we set our budgets in January of this year.

Management quantified the immediate impact of geopolitical events on revenue targets and acknowledged a shortfall from internal projections.

Asked by Karan Khanna

Delay in Airoli project timeline Direct
Okay. Just to clarify, there's actually been a regulation change and what the approvals that were coming through from the MoEF locally out of Maharashtra has because of the change by NGT where if you are within 5 kilometer radius of protected forest, which in this case would be the Sanjay Gandhi National Park, means that the file will actually have to move to the center for approval.

Management provided a specific reason (NGT regulation change) for the delay in a key project, indicating external regulatory hurdles.

Asked by Prashant Biyani

Goa market demand-supply outlook and RevPAR growth Direct
Look, we believe Goa is a very deep market and it has both very strong mid- and long-term potential, and that's why we're betting big with one land parcel in North Goa, one in South Goa, both beachfront, seafront properties very nicely scaped out, both in the range of 170 to 190 rooms. I think we will get a very strong foothold when we finish developing these properties.

Management reiterated strong conviction in the Goa market's potential and its strategy to invest significantly, expecting double-digit RevPAR growth despite some recent degrowth.

Asked by Archana Gude

Funding strategy for future growth and debt levels Direct
These are not immediate requirement, but this will be used as and when required for any strategic reasons. So you are right. Our capex, whatever we have declared the capex requirements will be met through our internal accruals.

Management clarified the purpose of the INR10 billion enabling resolution for debt, assuring that current capex plans are covered by internal accruals and the resolution is for future strategic flexibility.

Asked by Jinesh Joshi

Revenue recognition for Koramangala residential project Direct
So Jinesh, the collection is 90%. The condition was the 92% in terms of collection of flats which are going for possession. So the second condition is actual handover of possession. The actual handover possession is starting in the quarter one and probably by July we will be handing over possessions and recognizing revenue in our books as well.

Management provided a clear timeline and conditions for revenue recognition from the Koramangala project, which is a significant part of their residential portfolio.

Asked by Jinesh Joshi

Profitability comparison between leisure and city hotels Direct
So you don't get that much of benefit of scale. But the average room rates are typically higher in leisure hotel. Occupancy is slightly lower in leisure hotel. On a blend, the RevPAR in a mature leisure hotel is higher than most city hotels, but costs also slightly higher. If you noticed our leisure portfolio, the number of employees per room is significantly higher and therefore on a blended basis our employee per room has shifted to 1.01 or 1.1.

Management offered a detailed breakdown of the unit economics and operational differences between leisure and city hotels, explaining the trade-offs in scale, ARR, occupancy, and costs.

Asked by Rajiv

Impact of US trade deals on foreign traveler mix Direct
So, Kaustubh -- in our foreign traveler mix, US is 60% of the foreign travelers and companies based out of there if they get better trade conditions and we can see that India seems to have got some preferential treatment on that though we are still waiting for the final verdict, will keep us competitive and therefore we expect the businesses to grow.

Management highlighted a potential positive catalyst for foreign travel demand, specifically from the US, which constitutes a significant portion of their foreign guests.

Asked by Kaustubh

3 min read 7 chapters

Detailed narrative

Record Performance in Q4 and FY25

Chalet Hotels achieved its strongest financial performance to date in FY25, culminating in a record-breaking Q4. Consolidated revenue for Q4 reached INR5.4 billion, a 27% YoY increase, with EBITDA at INR2.6 billion, up 36% YoY, and an EBITDA margin of 47.8%. The hospitality segment reported an ARR of INR14,345 (up 21% YoY) and RevPAR of INR10,909 (up 21% YoY) in Q4. For the full year, hospitality revenue stood at INR15.2 billion with an all-time high EBITDA of INR6.8 billion, reflecting robust demand and operational efficiencies.

Strategic Acquisitions and Portfolio Expansion

The company continued its strategic expansion with the acquisition of The Westin Resort & Spa, Himalaya, for an enterprise value of INR5.3 billion in Q4, enhancing its presence in the leisure and wellness market. Further, the Board approved a definitive term sheet to acquire 15 acres of beachfront land in Bambolim, North Goa, for a new 170-room luxury hotel, marking its second project in Goa. Chalet aims to grow its total operating and pipeline keys to 5,000 in the next year or so, demonstrating an aggressive growth trajectory.

Project Development Updates and Regulatory Delays

Progress was noted across various projects, including the operationalization of 121 additional rooms at Bengaluru Marriott Whitefield, bringing its total inventory to 512 rooms. The Dukes Retreat, Khandala, is nearing completion of its upgradation, expected by H1 FY26. However, the Airoli project faced an unexpected delay due to changes in NGT regulations, which now require central government clearances for projects within a 5 km radius of national parks, pushing its start by at least six months.

Strong Performance in Rental and Residential Segments

The rental and annuity segment demonstrated significant growth, with Q4 revenue jumping 75% to INR619 million and an EBITDA margin of 80%. The exit run rate for March '25 was INR21 million per month. In the residential portfolio, 92% of the Koramangala project inventory has been sold, with handovers and revenue recognition expected to commence in Q1 FY26, likely by July. The company anticipates reaching over 90% committed occupancy in its rental portfolio within the next 2-3 quarters.

Prudent Capital Allocation and Debt Management

Chalet Hotels deployed INR11 billion on capex and strategic acquisitions in FY25, the highest in a single year, and has budgeted INR23 billion for capex over the next three years, primarily funded by internal accruals. Net debt stood at INR19.9 billion as of March '25. The company successfully allotted INR750 million in NCDs at an 8.35% coupon rate and reduced its average cost of finance to 8.4% (down 47 bps YoY). Management is committed to maintaining a net debt to EBITDA ratio below 3.5x, ideally in the 3x range.

Market Outlook and Diversification Strategy

Management expressed confidence in achieving double-digit RevPAR growth, citing strong demand-supply dynamics. The company's strategy involves diversification across geographies (including Delhi, Rishikesh, Pune, and Goa), target audience segments (aiming for 20% leisure portfolio), and asset classes (residential and office for annuity income). This multi-pronged approach is designed to mitigate risks, leverage market tailwinds, and ensure sustainable, value-accretive growth.

Impact of Geopolitical Situation and Resilience

The company acknowledged a volatile period in May due to geopolitical developments, which resulted in May month-to-date growth trending 12% over last year but 9% below internal targets. This situation led to some MICE segment cancellations, though many were pushed forward rather than fully cancelled. Management expressed optimism for a quick recovery if the situation stabilizes, noting that domestic travel has a shorter lead time and foreign travel, particularly from the US (60% of foreign guests), could benefit from improved trade conditions.

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