Chalet Hotels Limited — Q4 FY26 earnings call

Call held 15 May 2026

Management summary

Chalet Hotels delivered a milestone FY26 with strong revenue and EBITDA growth, driven by robust performance across segments and strategic pipeline expansion. Despite Q4 headwinds from Mumbai's underperformance and geopolitical tensions impacting international travel, the company remains confident in the domestic hospitality sector's strength and its disciplined capital allocation strategy. New projects in Udaipur and Hyderabad, along with ongoing asset stabilization, are expected to fuel future growth.

Highlights

  • Consolidated revenue crossed INR25 billion for FY26, reflecting scale and strength.

  • Consolidated EBITDA crossed INR10 billion for FY26, demonstrating strong profitability.

  • Ex-residential revenue grew 18% YoY to INR20,741 million, with EBITDA up 21% YoY to INR9,573 million for FY26.

  • Ex-residential EBITDA margin improved by 97 bps to 46.2% for FY26, driven by operating leverage and cost discipline.

  • Pipeline expanded with 2 major projects: Udaipur Resort (144 keys, INR1,710 million acquisition) and Hyderabad Ritz-Carlton (330 keys, INR5,600 million fit-out cost).

Concerns

  • Q4 RevPAR declined 3% YoY, largely due to a 7.7 percentage point drop in occupancy.

  • Mumbai market underperformed in Q4 due to municipal elections, a long weekend, and absence of large events.

  • Geopolitical tensions in West Asia led to widespread cancellations and opportunity losses in March, impacting international business travel and resulting in a loss of 9,000 room nights.

  • Powai property faces temporary constraints due to ongoing CIGNUS II construction, affecting weddings, MICE, and crew occupancies.

  • Hospitality EBITDA margin for Q4 declined by 102 basis points to 47.4% due to portfolio mix and stabilization dynamics of resort assets.

Key financials

2 periods

Q4 FY26

  • Consolidated Revenue
    5,711 Mn
    YoY +6%
  • Consolidated EBITDA
    2,786 Mn
    YoY +8%
  • Consolidated EBITDA Margin
    48.8%
  • Ex-Residential Revenue
    5,706 Mn
    YoY +6%
  • Ex-Residential EBITDA
    2,800 Mn
    YoY +6%
  • Ex-Residential EBITDA Margin
    49.1%

FY26

  • Consolidated Revenue
    28,124 Mn
    YoY +60%
  • Consolidated EBITDA
    12,301 Mn
    YoY +59%
  • Consolidated EBITDA Margin
    43.7%
  • Ex-Residential Revenue
    20,741 Mn
    YoY +18%
  • Ex-Residential EBITDA
    9,573 Mn
    YoY +21%
  • Ex-Residential EBITDA Margin
    46.2%

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

Share of EBITDA (FY26)
12,875 Mn Total
  • Hospitality Segment 7,603 Mn 59.1%
  • Residential Project 2,728 Mn 21.2%
  • Commercial Real Estate Segment 2,544 Mn 19.8%

Capital allocation

high confidence
  • Capex ₹30 Bn largely funded through internal accruals
    • Hyderabad Ritz-Carlton fit-out cost (includes 40,000 sq ft commercial space) ₹5,600 Mn
    Looking ahead, we have outlined a planned capex of approximately INR30 billion over FY '27 to FY '29 across our hospitality and commercial real estate portfolio. This includes announced acquisition and committed investments and importantly, is expected to be largely funded through internal accruals, underscoring our focus on maintaining balance sheet discipline.
  • Debt Net ₹19 Bn Cost 7.5%
    Despite the significant investment phase, net debt has reduced from INR25 billion as of March '24 to approximately INR19 billion as of March '26. While a portion of this deleveraging was supported by equity inflow in April '24, it is important to highlight that approximately INR15 billion has been funded through internal accruals, reflecting the strength of our operating cash flows and disciplined capital allocation. ... The average cost of finance remains stable at 7.48% as of March '26.
  • M&A Udaipur Resort Acquisition · Closed · Consideration ₹[object Object] (undisclosed)

    Entry into fast-growing and deep leisure market, reducing land to launch risk, significant upgrade and relaunch as upper upscale resort.

    144 key resort spread over 8.2 acres of land.

    Udaipur - We completed the acquisition of Udaipur Resort, marking our entry into this fast-growing and deep leisure market of Udaipur. We have paid a total consideration of INR1,710 million for 144 key resort spread over 8.2 acres of land, reducing the land to launch risk substantially.
  • Liquidity Cash ₹4 Bn Comfortable liquidity position with a cash buffer.
    We continue to maintain comfortable liquidity position with a cash buffer of around INR4 billion as of year-end.

Guidance & targets

CRE Monthly Rental Run Rate

  • Monthly Rental Run Rate CRE Monthly Rental Run Rate · FY '27 · High confidence INR300 million
    We expect monthly rentals to scale up to INR300 million during FY '27.

    — Nitin Khanna

CRE Growth Driver

  • Growth from CIGNUS II CRE Growth Driver · FY '28 onwards · High confidence Step change in growth
    Commissioning of CIGNUS II at Powai will lead to a step change in growth FY '28 onwards.

    — Nitin Khanna

Taj Delhi Airport Project

  • Rooms Launch Taj Delhi Airport Project · Q4 FY '27 · High confidence 70 rooms
    We expect to launch 70 rooms at Taj project at Delhi International Airport by Q4 FY '27 with balance inventory to be launched in a phased manner thereafter.

    — Shwetank Singh

CIGNUS II Powai

  • Substantial Completion CIGNUS II Powai · FY '27 end · High confidence Substantial completion
    Work is at full swing at the CIGNUS II Powai, and we are on track for a FY '27 end substantial completion, although the West Asia crisis has put some pressure on labour availability.

    — Shwetank Singh

Residential Phase 2

  • Handover of Units Residential Phase 2 · FY '27 · High confidence 168 units
    Phase 2 residential comprising 168 units is under development with handover expected in FY '27.

    — Nitin Khanna

Hyderabad Ritz-Carlton

  • Launch Hyderabad Ritz-Carlton · end of FY '28 - '29 · High confidence Launch
    We expect to launch this project by end of FY '28 - '29.

    — Shwetank Singh

  • Average Room Rate (ARR) Hyderabad Ritz-Carlton · High confidence INR25,000
    Coming to the price positioning - should we expect INR25,000, I think quite easily.

    — Shwetank Singh

Resort Assets

  • Occupancy Resort Assets · as these assets mature · Medium confidence 60%
    Our resort assets are at an early stage of stabilization, with average occupancy at around 43% for the year, which we expect to trend towards 60% as these assets mature.

    — Nitin Khanna

Leisure Portfolio

  • EBITDA Margin Leisure Portfolio · Medium confidence mid-40s
    But on the leisure side, we still have some growth because we have not stabilized on the margins in our leisure portfolio. And we expect that to grow to at least mid-40s, thereby overall continuing to grow the margins of the portfolio.

    — Shwetank Singh

What to watch in Q1 FY27

CIGNUS II Powai Substantial Completion

By FY '27 end
Current Work at full swing, on track for FY '27 end substantial completion
Target Substantial completion achieved

Why it matters

Expected to bring major growth in CRE and resolve temporary constraints at Powai property.

Work is at full swing at the CIGNUS II Powai, and we are on track for a FY '27 end substantial completion, although the West Asia crisis has put some pressure on labour availability.

Risks & concerns

  • Geopolitical tensions in West Asia impacting international travel

    high

    Led to widespread cancellations and opportunity losses in March, impacting international business travel and resulting in a loss of 9,000 room nights.

    Management acknowledged

  • Mumbai market underperformance due to local factors

    medium

    Municipal elections, a long weekend, and absence of large events impacted demand in January, causing Mumbai to underperform the industry average in Q4.

    Management acknowledged

  • Temporary constraints at Powai property due to CIGNUS II construction

    medium

    Ongoing construction of CIGNUS II Tower is affecting weddings, MICE demand, and crew occupancies due to noise and connectivity issues, leading to short-term stress on occupancy.

    Management acknowledged

  • Hospitality margin compression due to portfolio mix and stabilization dynamics

    medium

    Q4 hospitality EBITDA margin declined by 102 bps due to the early stabilization stage of resort assets (average occupancy around 43%) and costs related to incremental inventory at Bengaluru.

    Management acknowledged

  • Labor availability pressure for projects

    low

    The West Asia crisis has put some pressure on labor availability for projects like CIGNUS II Powai.

    Management acknowledged

Q&A highlights

7 direct
Rationale for subsidiary level dilution for DIAL project instead of debt/internal funding Direct
So it is not a capital decision for us, Jinesh. Let me clarify that. This is not a capital decision. We are trying out a project level partnership that we have not tried before. We're just trying to figure out how this works.

Clarifies that the DIAL equity partnership is a strategic experiment rather than a capital constraint decision, addressing investor concerns about dilution.

Asked by Vikas Ahuja

Funding mix for INR30 billion capex over FY27-29 and expected peak debt levels Direct
for announced projects, this entire INR30 billion will be funded through internal accruals. ... I don't see any major capital, which we are going to draw from the borrowings as such, unless there is a very strategic acquisition coming in our place.

Provides clarity on the company's commitment to fund significant future capex through internal accruals, minimizing reliance on additional debt.

Asked by Vikas Ahuja

Impact of corporate-heavy portfolio on FY27 ADR outlook compared to leisure-heavy peers Direct
No, not really. We continue to believe in the strength of the business. In fact, if you have heard the recent announcements from our honorable Prime Minister has spoken about encouraging more travel within India. So, it's a trend that we are closely watching out for.

Addresses concerns about potential pricing pressure on ADR due to portfolio mix, with management expressing confidence in domestic travel and diversification into leisure.

Asked by Vikas Ahuja

Timeline for full lease-out of CIGNUS II and Bangalore market impact Partial
On the commercial leasing side, actually, we have had a very decent pickup at Bangalore. I think we have now upped our occupancy to nearly 91% in Bangalore. So, I think we have made good progress there. And actually, part of our comment on the leasing was for CIGNUS II, it was not for our existing inventory.

Clarifies that existing commercial inventory is performing well (90%+ occupancy) and the longer timeline refers to the new CIGNUS II project, not a slowdown in the Bangalore market.

Asked by Sameet Sinha

Q4 RevPAR decline, March performance, and foreign tourist arrival trends Direct
In the South hotels, particularly in March, what we witnessed was a dramatic amount of cancellations. Just to give you a number, we lost almost 9,000 room nights from foreign tourist arrivals and some attached business, as I had referred to in my speech from the domestic side, which was a much smaller number, but still an attached number.

Explains the specific impact of geopolitical tensions on foreign tourist arrivals in March, quantifying the loss in room nights and providing context for Q4 RevPAR underperformance.

Asked by Prateek Kumar

Stabilization phase and growth potential of newly added hotels (Bangalore, Athiva Khandala, FPS/Athiva Vashi, Westin Rishikesh, Courtyard Aravali) Direct
Athiva Khandala is only entering its first proper operational year... we believe that there is a very strong potential of growth there in this year and in the coming 2 to 3 years. ... Our resort assets are at an early stage of stabilization, with average occupancy at around 43% for the year, which we expect to trend towards 60% as these assets mature.

Provides detailed insights into the ramp-up and stabilization timelines for key new assets, offering visibility on future growth drivers.

Asked by Akash Gupta

Strategy and IRRs for Udaipur and Hyderabad acquisitions Direct
On the leisure side, we have always said that we wanted to diversify our portfolio to get to at least 20% of our revenue from the leisure segment. ... Hyderabad has been on fire for a long time. And that particular micro market, we love because we have 13 million square feet of our own office space there in that micro market from our sister concern Mindspace.

Explains the strategic rationale behind these acquisitions, focusing on market diversification, reducing land-to-launch risk, and leveraging existing group presence for Hyderabad.

Asked by Akash Gupta

Impact of CIGNUS II construction on Powai occupancy and outlook for Athiva Vashi post-rebranding Direct
Coming to Powai, I think we did mention that there is a short-term stress on the occupancy side because we have an under construction commercial building there. ... FPS - that market has always been strong. We have always been a leader in that market and by a very, very long margin.

Acknowledges the temporary negative impact on Powai due to construction but expresses strong confidence in the Athiva Vashi market post-rebranding, providing specific operational details.

Asked by Adhidev Chattopadhyay

3 min read 7 chapters

Detailed narrative

Strong FY26 Performance Despite Q4 Headwinds

Chalet Hotels achieved a milestone year in FY26, with consolidated revenue crossing INR25 billion and EBITDA exceeding INR10 billion. Ex-residential revenue grew 18% YoY to INR20,741 million, and EBITDA increased 21% YoY to INR9,573 million, with margins improving by 97 bps to 46.2%. However, Q4 FY26 saw a 3% YoY decline in RevPAR, primarily due to a 7.7 percentage point drop in occupancy, influenced by Mumbai's underperformance and geopolitical tensions in West Asia.

Hospitality Segment Dynamics and Challenges

For FY26, hospitality revenue grew 14% YoY to INR17,311 million, with EBITDA up 12% to INR7,603 million. Q4 hospitality revenue grew 3% YoY to INR4,740 million, but EBITDA margin declined by 102 bps to 47.4%, attributed to portfolio mix and the early stabilization stage of resort assets, which had an average occupancy of around 43% for the year. The Mumbai market specifically saw ADR growth of only 0-2% and occupancy decline of 0-2 percentage points in Q4, contrasting with India's overall ADR growth of 6-8%.

Robust Commercial Real Estate Growth and Outlook

The Commercial Real Estate (CRE) segment continued its strong performance, with FY26 revenue growing 55% YoY to INR3,061 million and EBITDA up 65% YoY to INR2,544 million, achieving an 83.1% EBITDA margin. For Q4, CRE revenue grew 37% YoY to INR847 million, with EBITDA up 42% to INR708 million. The monthly rental exit run rate reached INR280 million in March 2026 and is expected to scale up to INR300 million in FY27, with significant growth anticipated from the commissioning of CIGNUS II in FY28.

Strategic Pipeline Expansion and Acquisitions

Chalet Hotels expanded its pipeline by adding two major projects, increasing total key count to over 5,000 (3,389 operating + 1,655 pipeline). This includes the acquisition of Udaipur Resort for INR1,710 million (144 keys) and a new ultra-luxury 330-key Ritz-Carlton hotel in Hyderabad, with a fit-out cost of INR5,600 million, expected to launch by FY28-29. The company also plans to launch 70 rooms at the Taj project at Delhi International Airport by Q4 FY27.

Disciplined Capital Allocation and Strong Balance Sheet

Over the last two years, Chalet deployed INR19 billion towards growth capex and acquisitions, with INR15 billion funded through internal accruals. Net debt reduced from INR25 billion in March 2024 to INR19 billion in March 2026, and the average cost of finance remained stable at 7.48%. The company has outlined a planned capex of INR30 billion for FY27-29, largely to be funded by internal accruals, maintaining a cash buffer of around INR4 billion.

Sustainability Achievements

Chalet Hotels demonstrated strong commitment to sustainability, with its corporate sustainability assessment score by Dow Jones Sustainability Index jumping from 67 to 82, placing it second globally among hospitality peers. The company also increased its green energy consumption to 65%, highlighting its focus on sustainable growth.

Market Outlook and Demand Drivers

Management expressed confidence in the domestic hospitality sector's strength, driven by rising disposable incomes, improved infrastructure, and a favorable demand-supply gap. While Q4 saw a dip in foreign tourist arrivals due to geopolitical tensions (9,000 room nights lost in March), domestic leisure demand remains strong, and a recovery in international travel is expected as tensions subside, with April and May showing improved trends.

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