Kamat Hotels (I) Q1 FY27 earnings call

Kamat Hotels delivered a stellar Q1 FY27, with consolidated revenue growing over 10% YoY to ₹91 crores. This top-line growth was coupled with significant profitability improvement, as EBITDA rose 36% to ₹25 crores from ₹18 crores in Q1 FY26. Consequently, EBITDA margins expanded by a robust 530 basis points, reaching 27% in Q1 FY27 compared to 22% in the prior year, driven by effective pricing discipline and operational efficiency.

The company demonstrated strong RevPAR growth across its brands, with Orchid and Lotus reporting 18% and 17% increases respectively. Notably, Orchid Mumbai's revenue surged 35% YoY, leading to a 50% YoY increase in its EBITDA. This performance highlights the company's ability to drive operating leverage, even with the scaling up of four new properties added in the last 2-3 quarters, which typically entail higher initial operating costs.

Kamat Hotels is actively expanding its portfolio, with new properties like Ira by Orchid Bhavnagar recently opened and receiving positive response. The company anticipates adding approximately 400 keys over the next 12-15 months. Key upcoming openings include Orchid Dwarka by December 2026 and the Gwalior hotel by Diwali 2026. However, the Dehradun and Nashik properties have experienced delays due to owner-dependent capex and technical issues, respectively.

The company's balance sheet has significantly improved, with consolidated net debt reducing to a comfortable ₹38 crores as of Q1 FY27. This was achieved by managing consolidated debt of ₹105 crores against cash and cash equivalents of ₹65 crores. Management expressed confidence in their financial position, stating they could comfortably raise up to ₹300 crores in debt to fund future expansion plans.

The Indian hospitality sector is experiencing a robust recovery, fueled by rising travel aspirations, improved connectivity, and higher discretionary spending. The company benefited from increased domestic tourism, partly due to global factors like fuel shortages and geopolitical turmoil. Management also highlighted the growth of alternative hospitality segments, such as medical tourism, and noted the overall resilience and booming nature of the sector.

Kamat Hotels aims to achieve a long-term EBITDA margin of 30% within the next two to three years, driven by both higher revenue and continuous cost rationalization efforts, including the adoption of renewable energy. The company plans a balanced growth strategy, combining asset-light models (lease/revenue share) with owned hotels (brownfield or new development), strategically expanding into new cities to avoid cannibalization and ensure sustainable growth.