Kamat Hotels (I) Limited

Kamat Hotels reported a Q3 FY26 consolidated revenue of INR 118 crores, marking a 12% year-on-year increase. EBITDA for the quarter stood at INR 39 crore, with an EBITDA margin of 33.14%. However, Profit After Tax (PAT) for Q3 FY26 was INR 19 crore, a decline from INR 26 crore in the corresponding quarter of the previous year, resulting in a PAT margin of 16.23%. For the nine months of FY26, consolidated revenue was INR 276 crore (+4% YoY), with EBITDA at INR 65 crore (23.56% margin) and PAT at INR 21 crore (7.66% margin).

The company experienced a stronger recovery in Q3 compared to H1, with November being an 'exceedingly fantastic month.' However, the broader hospitality sector faced volatilities from aviation disruptions, which 'definitely affected us,' particularly in leisure segments. Road conditions in Shimla-Manali also negatively impacted performance, with these hotels 'not performing very well up to our expectation' YTD. Newly opened hotels like Jamnagar and Chandigarh incurred initial 'heavy losses' in their first year, as pre-opening expenses are expensed rather than capitalized.

Several planned hotel openings, including Dehradun, Gwalior, Nashik, and Bhavnagar, have been delayed but are expected to add approximately 280-290 rooms in the 'coming annual year' (FY27). Gwalior's opening was revised from March 2026 to end of FY26 (September). These delays create an OPEX burden, as staff and some CAPEX are incurred before revenue generation. Management estimates these new properties could lead to INR 2 crore to INR 2.5 crore in EBITDA losses in FY27.

The Mumbai market remains buoyant, with strong occupancy in existing properties like Orchid Mumbai (80% occupancy in Q3 FY26, up from 74% YoY) and an ARR of INR 7,818 (up from INR 7,165 YoY). While significant new supply (estimated 2,500 rooms) has entered the market, management believes Mumbai is 'insulated' by MICE demand driven by Jio Convention Center and NESCO, preventing negative impact on existing hotels. However, ADRs are expected to 'start plateauing' in the future, though they have seen growth this season.

The renovated Orchid Pune is showing strong uptake, with ARR increasing from INR 5,500-5,700 to INR 6,400-6,700 within 20 days of the first phase completion. The company expects the Pune hotel to perform 'exceedingly well' in the coming year. Separately, a lease dispute regarding the Pune property, with a provisioning of INR 21 crore, is considered a 'technical point' by management, who expects it to be resolved soon without jeopardizing operations.

Kamat Hotels revised its FY26 top line guidance, expecting to be 'around 5% to 7%' lower than the initial INR 400 crore target. The company plans to increase its operational rooms in Pune from 386 to 410. Additionally, an extra wing with 25 rooms is expected to be added to the Noida property, which is anticipated to significantly improve sales and EBITDA once operational. The Puri hotel project is projected to take another two and a half to three years to complete due to clearance issues.