Ventive Hospitality Q1 FY27 earnings call

Ventive Hospitality reported a strong start to FY27 with consolidated revenue growing 7% year-on-year to INR554 crores. Consolidated EBITDA stood at INR205 crores, maintaining a healthy margin of 37%. The overall performance was driven by the continuous strength of the hospitality business and stable contribution from the annuity segment, showcasing the quality and diversification of the portfolio.

The India hospitality segment delivered an impressive performance, with revenue growing 13% to INR203 crores. EBITDA for India grew 16% to INR74 crores, leading to a margin expansion from 35% to 36%. This growth was supported by resilient corporate demand, strong MICE activity, and premium leisure, with Pune, Bengaluru, and Goa assets performing particularly well. The company noted its operating leverage and the structural progress in energy cost management as key drivers.

Maldives revenue grew 5% to INR218 crores, demonstrating resilience despite war-related cancellations early in the quarter. However, EBITDA declined 32% to INR32 crores, primarily due to a INR19 crore increase in fuel and ancillary costs, as diesel prices reached 2.1x pre-war levels. To counter this, Ventive is increasing solar capacity at Raaya to 80% by April 2027, expecting to save $1.5 million annually and protect against future diesel price shocks. Management expects Q3 and Q4 recoveries to offset the Q1 impact.

The annuity business continued to provide a stable backbone for the group, with revenue growing 3% to INR128 crores. EBITDA remained broadly flat at INR111 crores, maintaining an 87% margin. This segment's dependable cash flow enables continued investment through economic cycles, and the recent addition of Narmada Estates in Pune is expected to further extend this base.

Ventive made a significant strategic move by acquiring Sahyadri Hills, Wellness Estate, a Ritz-Carlton Reserve, for an equity consideration of INR281 crores (enterprise value INR466 crores), targeting a yield-on-cost above 12%. This acquisition, completed in July, positions Ventive in the fast-growing luxury wellness and branded residences segment. The wider pipeline includes over 1,700 keys across 8 upcoming hotels, with projects like AC by Marriott Bengaluru and Varanasi Marriott progressing towards completion between FY28-FY30. The promoter group's ROFO pipeline of 1,114 keys provides visibility towards a 4,000-plus key ambition.

The company is making significant strides in green energy, with 70% of electricity for Pune hotels already from green sources. An investment of INR60 crores in a captive solar plant for Pune, commissioning in Q4 FY27, is expected to raise green energy contribution to 85%, reduce energy bills by 45%, and boost India EBITDA by 5-6% with a 3-year payback. Similar solar capacity expansions are underway in Maldives to mitigate fuel cost volatility.

Ventive maintains a strong balance sheet with total debt at INR2,095 crores (INR1,329 crores Indian assets, USD81 million Maldives assets) and a net debt of INR1,514 crores. The net debt to EBITDA ratio stands at a healthy 1.2x. The cost of debt has reduced to 7.2% for the Indian portfolio and 6.1% for Maldives assets. The group generated INR156 crores of operating cash, which was effectively deployed towards capex and acquisitions, demonstrating disciplined capital management.