
Chalet Hotels Ltd. delivered a robust Q3 FY26 performance that surpassed IDBI Capital's estimates across key operating parameters. According to the brokerage report, the company demonstrated strong operational metrics that reinforced management's positive outlook for the domestic hospitality sector. The performance was driven by healthy demand trends and effective cost management strategies implemented by the management team.
Across markets, average daily rate growth continued in healthy double digits, with Bangalore, Hyderabad, Pune, and MMR posting solid momentum throughout the quarter. As reported by IDBI Capital, MMR delivered high single-digit RevPAR growth despite operational headwinds at Powai and Vashi locations, outperforming the broader Mumbai market. This performance indicates strong demand recovery across key metropolitan markets.
Chalet's newly launched Athiva Khandala resort brand delivered encouraging early traction, recording multiple sold-out days within its first 45 days of operation. According to the brokerage report, the brand's success was backed by strong guest reviews and rising traction in weddings and MICE-led bookings, demonstrating the company's ability to expand its market presence effectively.
The company's growth trajectory is supported by significant expansion initiatives, with addition of 129 keys at Bangalore and 147 keys at Khandala becoming fully operational from mid-November onwards. Prabhudas Lilladher reports that the annuity business is likely to witness addition of 0.9 million sq ft of area by Q4 FY27E, with 5-slabs already casted. The company also received environmental clearance at Hyatt, Airoli, paving way for another greenfield addition in the foreseeable future. With potential to add ~150 keys in the near term if the Udaipur acquisition proceeds after due diligence, the growth funnel remains robust.
Chalet Hotels core business (excluding residential) recorded 23.3% YoY growth in revenues to ₹572.6 crore, driven by 22.7% YoY growth in hospitality business and 30% YoY growth in Annuity business. The company's consolidated EBITDA performance exceeded estimates, with management guiding that Indian hospitality demand remains structurally strong, driven by rising disposable incomes, experiential travel preferences, weddings, MICE activity, and improving infrastructure.
IDBI Capital has rolled forward its valuation to FY28E while maintaining a Hold rating with a revised target price of ₹1,007, down from the earlier target of ₹1,025. Prabhudas Lilladher has issued a Buy rating with a target price of ₹1,089, valuing the hotel business at 20x FY28E EBITDA (previously 24x), annuity portfolio at a cap rate of 8.5%, and residential project at NAV of ₹17 per share. Multiple reports suggest the stock is trading below its 50-day SMA of ₹873, with analysts highlighting that management commentary remains upbeat, with Indian hospitality demand seen as structurally robust, supported by rising disposable incomes, experiential travel trends, weddings, MICE activity, and improving infrastructure.