Royal Orchid Hotels Limited — Q3 FY26 earnings call

Call held 19 Feb 2026

Management summary

Royal Orchid Hotels Ltd. delivered a strong Q3 FY26 with income from operations up 26.6% and EBITDA up 32.8%, driven by a 45% surge in room revenue. The new ICONIQA Mumbai property performed exceptionally, generating INR17.4 crores, though it incurred a Q3 loss due to initial pre-operating expenses and IndAS adjustments. The company continues its asset-light expansion, reaching 10,700 keys with a robust pipeline of 47+ hotels, and expects to be debt-free post a multi-hotel sale.

Highlights

  • Income from operations grew 26.6% year-on-year, reflecting disciplined growth and operational excellence.

  • Room revenue surged 45% year-on-year, indicating strong market demand and brand positioning.

  • EBITDA grew by 32.8%, demonstrating continued focus on cost efficiency and premium positioning.

  • ICONIQA Mumbai achieved exceptional performance, generating INR17.4 crores in income and ranking No. 1 Hotel on TripAdvisor in Mumbai within 4 months.

  • The company expanded its portfolio to 10,700 keys across 168-plus hotels, with an additional 47-plus hotels in the pipeline, aligning with an asset-light philosophy.

Concerns

  • ICONIQA Mumbai reported an INR1.6 crore loss in Q3 FY26 due to pre-operating expenses and licensing delays.

  • EPS dropped by 40% year-on-year, primarily impacted by a notional IndAS 116 effect of INR12-13 crores related to a 25-year fixed lease for ICONIQA.

  • Growth in non-ICONIQA managed hotels (excluding ICONIQA) was in single digits, with the top line growing from INR90 crores to approximately INR98 crores.

Key financials

2 periods

Headline

  • Income from Operations Growth
    26.6%
    YoY +26.6%
  • Room Revenue Growth
    45%
    YoY +45%
  • EBITDA Growth
    32.8%
    YoY +32.8%
  • EPS Drop
    -40%
    YoY -40%

Q3

  • ICONIQA Mumbai Income
    ₹17.4 Cr
  • ICONIQA Mumbai Loss
    ₹1.6 Cr

What they filed

Q1 FY27: revenue up 9.8%, net profit down 22.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue47 57 53 48 48 +3%59 +3%54 +2%52 +10%
EBITDA11 17 10 11 12 +7%16 −8%13 +34%10 −11%
Net profit6 8 4 4 4 −38%7 −15%20 +415%3 −22%
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.

Capital allocation

high confidence
  • Debt Debt disclosed Cost 7.8%
    It is debt free in the sense that we need to now decide how do we use these funds. Whatever funds is there, how do we should we clear the debt or should we use it for the growth of the company? Now that since the debts have come down drastically, the cost of the debt is now almost around 7.75%.
  • M&A Subsidiary (multi-hotel transaction) Divestment · Signed · Consideration ₹[object Object] (cash)

    Strategic divestment to generate funds for growth or debt reduction.

    Sub-INR30 crores after paying taxes. 40-45% of money already received, balance by April end.

    See, the subsidiary sale we have initiated, we have signed the MOU and the money has started coming into our account. Two tranches of money has already come, almost 40%, 45% money has already come into our account. Balance will come in March and April. So by April end, the entire transaction will get closed.

Guidance & targets

Revenue

  • ICONIQA Mumbai Revenue Revenue · Q4 FY26 · Medium confidence INR23-24 crores
    Roughly INR23 crores, INR24 crores in this quarter we should get from ICONIQA.

    — Amit Jaiswal

  • Upcoming Revenue Share Hotels Top Line (Lucknow) Revenue · Post-launch · Medium confidence INR40 crores
    The top line from Lucknow will be somewhere around INR40 crores.

    — Amit Jaiswal

  • Upcoming Revenue Share Hotels Top Line (Gurgaon) Revenue · Post-launch · Medium confidence INR25 crores
    And the Gurgaon one will be around INR25 crores.

    — Amit Jaiswal

  • Upcoming Revenue Share Hotels Top Line (North Goa) Revenue · Post-launch · Medium confidence INR20-22 crores
    And both the North Goa one, Dodamarg one will come roughly around INR20 crores. First year it will be around INR12 crores to INR15 crores. Second year it should reach INR18 crores.

    — Amit Jaiswal

  • Upcoming Revenue Share Hotels Top Line (South Goa) Revenue · Post-launch · Medium confidence INR6 crores
    And the South Goa one, that one will be around INR6 crores.

    — Amit Jaiswal

  • Total Top Line from 4 Revenue Share Hotels Revenue · Post-launch (fully operational) · Medium confidence INR100 crores
    So cumulatively that adds roughly INR100-odd crores to the revenue.

    — Amit Jaiswal

  • Company Top Line Revenue · FY26 · Medium confidence INR420 crores
    Yeah, we are expecting that only. Around INR420 crores top line we are expecting from this year.

    — Amit Jaiswal

  • ICONIQA Mumbai Peak Revenue Revenue · Next year · Medium confidence INR28 crores
    Next year definitely we will peak... We should be somewhere around INR28 crores. We should be able to do.

    — Amit Jaiswal

  • ICONIQA F&B Revenue Contribution Revenue · FY27 · Medium confidence 20-25%
    So around 20%, 25% only will come from the F&B and balance will come from rooms.

    — Amit Jaiswal

  • Company Top Line Revenue · FY27-28 · Medium confidence INR500 crores
    Next '27-'28 what the guidance we have given, INR500 crores we should be able to do.

    — Amit Jaiswal

  • Managed Business Top Line Revenue · Current Financial Year · High confidence INR45 crores
    like current financial, we are looking at a top line from managed business of roughly around INR45 crores

    — Amit Jaiswal

  • Managed Business Top Line Revenue · Next year · Medium confidence INR55-58 crores
    next year projection roughly around INR55 crores, INR58 crores of top line in the managed business

    — Amit Jaiswal

Profitability

  • ICONIQA Mumbai Profitability Profitability · Q4 FY26 · High confidence Profitable
    Going forward it will become profitable.

    — Amit Jaiswal

  • Managed Business Bottom Line (EBITDA) Profitability · Current Financial Year · High confidence 47-48%
    out of which almost 47%, 48% flows down to the bottom line.

    — Amit Jaiswal

  • Managed Business Bottom Line (EBITDA) Profitability · Next year · High confidence 47-48%
    and around 47%, 48% of the bottom line.

    — Amit Jaiswal

EBITDA

  • Total EBITDA from 4 Revenue Share Hotels EBITDA · Post-launch (fully operational) · Medium confidence INR100 crores
    And that will give me an additional around INR100 crores of top line and around that kind of EBITDA.

    — Amit Jaiswal

Property Count

  • ICONIQA Hotels Property Count · 2030 · High confidence 8
    So that's really tough to say, but our target for 2030 was to do 8.

    — Arjun Baljee

Revenue Growth

  • Managed Business Growth Revenue Growth · Next year · High confidence 20%
    Next year, growth of almost 20% will be there.

    — Amit Jaiswal

New Hotels

  • Pipeline Hotels Operational New Hotels · Next 1-1.5 years · Medium confidence All 47 hotels
    So I feel that our target of one and a half years getting to what another 45 hotels should not be very difficult to achieve.

    — Chander K. Baljee

  • Q4 FY26 Managed Hotel Openings (Keys) New Hotels · Q4 FY26 · High confidence 220 keys
    Yeah, Q4, we've got hotels opening in Ambala, Rishikesh, Bhuj, Bhadohi. These are the confirmed ones... Roughly around 220 keys, roughly.

    — Keshav Baljee

What to watch in Q4 FY26

ICONIQA Mumbai Profitability

Q4 FY26
Current INR1.6 crore loss in Q3 FY26
Target Profitable

Why it matters

Verifying ICONIQA's profitability in Q4 will confirm the management's guidance and the property's operational stabilization after initial setup costs.

Going forward it will become profitable.

Risks & concerns

  • Inherent risk of revenue sharing models

    medium

    The notion that revenue sharing is more profitable than management needs introspection due to inherent risk, unlike pure cash flow from management contracts.

    The notion that revenue sharing is more profitable than management actually needs just a little introspection on because there is an inherent risk to revenue sharing.

    Management acknowledged

  • Impact of IndAS 116 on reported profitability metrics

    medium

    A notional IndAS 116 effect of INR12-13 crores, primarily from ICONIQA's 25-year fixed lease, significantly impacted Q3 EPS (40% drop), masking underlying operational performance.

    So notional, IndAS effect, which has come almost INR13 crores, we have taken INR12 crores, we have taken the hit in this quarter. That is why I have always published IndAS and without IndAS result.

    Management acknowledged

  • Initial profitability challenges for new properties (ICONIQA Mumbai)

    low

    ICONIQA Mumbai was not profitable in Q3 due to pre-operating expenses and delays in obtaining a bar license, which impacted full-fledged operations until November.

    No, I'll tell you this quarter why it was not profitable. There were a lot of pre-operating expenses... So that is why you are seeing that there is a little minus.

    Management acknowledged

  • Delays in hotel openings due to licensing issues

    low

    ICONIQA Mumbai's opening was delayed by almost 3 months due to license issues, indicating potential for similar delays in other upcoming properties.

    But you know our country, how it is. ICONIQA was ready to open in the month of June-July, but we got delayed by almost 3 months due to license issues and all.

    Management acknowledged

Q&A highlights

6 direct
Profitability of ICONIQA Mumbai in Q3 and future outlook Direct
No, I'll tell you this quarter why it was not profitable. There were a lot of pre-operating expenses... So that is why you are seeing that there is a little minus. Going forward it will become profitable.

Clarifies the reasons for ICONIQA's Q3 loss and provides a positive outlook for its profitability in Q4, which is crucial for understanding the new property's performance.

Asked by Yash Dantewadia

Impact of IndAS 116 on EPS and profitability Direct
See, it's primarily because of ICONIQA, which is on a fixed lease for 25 years. So Indian accounting standard, IndAS 116 has created this. So notional, IndAS effect, which has come almost INR13 crores, we have taken INR12 crores, we have taken the hit in this quarter. That is why I have always published IndAS and without IndAS result. And if you look at the without IndAS result, it's pretty good.

Explains the significant 40% EPS drop as largely due to a non-cash, notional IndAS 116 impact of INR12-13 crores related to ICONIQA's lease, suggesting underlying operational performance is better.

Asked by Yash Dantewadia

Timeline and proceeds from subsidiary sale and debt-free status Direct
See, the subsidiary sale we have initiated, we have signed the MOU and the money has started coming into our account. Two tranches of money has already come, almost 40%, 45% money has already come into our account. Balance will come in March and April. So by April end, the entire transaction will get closed... it is not INR40 crores, it is sub-INR30 crores after paying taxes.

Provides clarity on the progress and expected completion of a significant asset sale, the amount of proceeds (sub-INR30 crores post-tax), and its potential impact on the company's debt position and future capital allocation.

Asked by Yash Dantewadia

Occupancy numbers for ICONIQA Mumbai Partial
But sharing the occupancy outright, it will be not right on my part because, competition also looks at the data and all. So but however, let me tell you, it's doing a good occupancy, above 70, around 70 plus percentage and it will grow in time to come.

Management declined to provide specific occupancy numbers for competitive reasons but indicated it's 'above 70, around 70 plus percentage', offering qualitative insight into the new hotel's performance.

Asked by Rahul Bhangadia

Growth in non-ICONIQA managed hotels and overall pipeline Direct
Without ICONIQA, the numbers growth is in single digit... The managed hotel side, see we have signed a lot of hotels in the pipeline. 47 hotels are in pipeline... So there will be a robust growth in the coming financial year once all these hotels opens up and we start getting our fees.

Addresses concerns about single-digit growth in existing managed hotels by highlighting the significant pipeline of 47 new hotels expected to drive robust growth in management fees in the coming financial year.

Asked by Rahul Bhangadia

Breakdown of depreciation and finance cost increase due to IndAS Partial
No, no, out of that INR12 crores is notional. INR12 crores is notional and actual rent also we are paying, you know, INR3 crores a month... So, there is some IndAS effect of other hotels also, no? We have certain other hotels also are there, no?

Seeks to clarify the components of the INR19.48 crore notional increase in depreciation and finance costs, with management confirming INR12 crores is notional (IndAS effect) and INR3 crores/month is actual rent, with other hotels also contributing to IndAS impact.

Asked by Chirag Singhal

Renovation plans for Bangalore central property and capital investment Direct
So that hotel, I'll take that. We're in the middle of evaluating exactly what standard that hotel needs to be at in order to compete with the micro market over there, right? And what is the gap in the micro market? So we're just in the middle. And of course, if you put in any capital, you do expect a return on that capital. So we're just going to, we will definitely come back to you guys with exactly the plan that we've got the moment it's formed up and we have a renovation plan in place. But rest assured, money is going in. We will ensure that there is an uptick.

Indicates that the company is actively evaluating renovation plans for a key Bangalore property, implying future capital deployment and expected performance improvement, with a promise to share details later.

Asked by Yash Dantewadia

Keshav Baljee's new role as Executive Director Direct
He is right now coming full time and he is going to be actually right now diagnosing the issues of the company and then he will have a clarity by another one or two months what all he is going to be actively doing. Right now, main role is to get the hotels which are in the pipeline, to get them operational, ASAP, also to look at the underperforming hotels, how to make them perform better than what they are doing right now. That is the current role.

Clarifies the immediate focus of the newly appointed Executive Director, Keshav Baljee, on operationalizing pipeline hotels and improving underperforming assets, signaling a strategic focus on execution and efficiency.

Asked by Pawan Sehrawat

2 min read 6 chapters

Detailed narrative

Strong Operational Performance in Q3 FY26

Royal Orchid Hotels reported a robust Q3 FY26, with income from operations growing by 26.6% year-on-year. This was significantly driven by a 45% year-on-year surge in room revenue. The company's EBITDA also saw a healthy increase of 32.8%, reflecting effective cost management and a premium market positioning. These figures underscore the company's disciplined growth and operational excellence.

ICONIQA Mumbai's Initial Performance and Profitability Outlook

The newly launched ICONIQA Mumbai demonstrated exceptional market acceptance, generating INR17.4 crores in income within its first few months of operation and achieving a No. 1 ranking on TripAdvisor in Mumbai. However, the property reported an INR1.6 crore loss in Q3 FY26 due to pre-operating expenses and delays in obtaining a bar license. Management expects ICONIQA Mumbai to become profitable in Q4 FY26, with projected revenues of INR23-24 crores for the quarter and a peak revenue of INR28 crores next year.

Impact of IndAS 116 on EPS and Financial Reporting

The company's reported EPS dropped by 40% year-on-year, primarily due to a notional IndAS 116 effect. This accounting standard, applied to ICONIQA's 25-year fixed lease, resulted in a non-cash impact of approximately INR12-13 crores in Q3 FY26. Management emphasized that the underlying operational performance, excluding this notional impact, remains strong, and they publish results both with and without IndAS adjustments for clarity.

Asset-Light Expansion and Pipeline Growth

Royal Orchid Hotels continues to pursue an asset-light expansion strategy, reaching a milestone of 10,700 keys across 168-plus hotels. The company has a strong pipeline of 47-plus hotels, with expectations for all to become operational within the next 1 to 1.5 years. Specific upcoming revenue-sharing hotels include Lucknow (INR40 crores top line), Gurgaon (INR25 crores), North Goa (INR20-22 crores), and South Goa (INR6 crores), collectively projected to add INR100 crores in top line and EBITDA once fully operational.

Strategic Capital Allocation and Debt Management

The company is in the process of closing a multi-hotel subsidiary sale, which is expected to generate sub-INR30 crores after taxes, with 40-45% of the funds already received and the balance due by April end. Management noted that the cost of debt has reduced to approximately 7.75% and is evaluating whether to use the sale proceeds for further debt reduction or to fund growth initiatives. No large capital expenditure is planned for the next year, maintaining an asset-light approach.

Future Outlook and Management Team Strengthening

Royal Orchid Hotels projects a top line of around INR420 crores for FY26 and aims for INR500 crores by FY27-28. The managed business segment is expected to grow by 20% next year, reaching INR55-58 crores in top line with a 47-48% EBITDA flow-through. The company has also strengthened its management team with the appointment of Keshav Baljee as Executive Director, focusing on operationalizing pipeline hotels and improving underperforming assets.

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