Viceroy Hotels Limited

Viceroy Hotels reported a robust Q4 FY25 with revenue increasing 5% year-on-year to INR 36.6 crores. Operating EBITDA saw a significant jump of 59% year-on-year, reaching INR 10.83 crores, with a healthy margin of 29.6%. For the full fiscal year 2025, revenue from operations grew 13.87% to INR 136 crores, and operating EBITDA rose 61% to INR 37.55 crores, achieving a margin of 27.61%. Profit After Tax for FY25 was INR 76.4 crores, a 986% growth primarily driven by deferred tax income.

The company has outlined a phased investment approach for its existing Hyderabad properties. Phase 1 involves adding 56 new guest rooms, a spa, gym, and bar to the Courtyard by Marriott. Phase 2 focuses on upgrading 168 rooms at the Marriott and expanding the convention center from 10,000 sq ft to 20,000 sq ft. Phase 3 includes upgrading four F&B outlets, expanding the executive lounge, transforming the Altitude venue into a premium Pan-Asian restaurant bar, revamping the Marriott lobby, and upgrading 127 guest rooms. This comprehensive renovation is expected to cost approximately INR 120 crores over the next 2-3 years, with an anticipated payback period of 2-2.5 years.

Viceroy Hotels has signed a new operating agreement with Marriott Hotels India Private Limited for an upcoming hotel project in Madhapur, Hyderabad. This new property, spanning approximately 7,000 square yards, is expected to feature around 200 rooms and is a significant step in the company's growth strategy. The project is projected to go live in 3-4 years, subject to necessary approvals and construction. Management's long-term objective is to expand the total room inventory to 1,000 rooms, with the new hotel potentially tripling the current EBITDA for the financial year once operational.

Following the final approval of the resolution plan in October 2023, the management team has focused on operational efficiencies, which contributed significantly to the improved EBITDA margins. Mr. Venkata Krishna Reddy has taken over as the new Chief Financial Officer, while Mr. Pradyumna Kodali has transitioned to the role of Chief Operating Officer. This restructuring aims to divide operations and finance into distinct segments, ensuring focused growth and robust financial control.

Hyderabad has emerged as a top-performing city in terms of revenue per occupied room growth, driven by a recovery in business travel, increased corporate and social MICE activity, and rising leisure demand. The city's strong infrastructure and growing prominence as a hub for global capability centers have created a demand-supply gap in the hospitality sector. This positive trend is expected to continue, providing fertile ground for Viceroy Hotels' strategic expansions and investments.

The company recently raised INR 49.52 crores through a rights issue and is utilizing cash reserves for current renovations. For the new Madhapur project, Viceroy Hotels is considering a Qualified Institutional Placement (QIP) to raise INR 100-120 crores, prioritizing less debt. The current debt stands at approximately INR 50 crores, and management anticipates potentially adding another INR 50 crores of debt over the next 3-4 years. Upon completion and operation of all three properties, the company expects its EBITDA to be around INR 100 crores, targeting a net debt to EBITDA ratio of approximately 1:1.