According to reports from Moneycontrol, Prabhudas Lilladher has issued a buy rating on Chalet Hotels with a target price of ₹994 in its research report dated May 16, 2026. The brokerage maintains its positive outlook on the hospitality company despite current operational challenges. The firm has initiated coverage of Chalet Hotels (CHALET.NS) with a BUY rating and ₹994 target price, adjusting its valuation for the hotel business to 18 times estimated FY28 EBITDA, down from a previous 20 times multiple. Valuations for the annuity portfolio remain at an 8.5% cap rate, and the residential project at ₹17 per share Net Asset Value (NAV).
As of May 16, 2026, Chalet Hotels is trading at approximately ₹784.65, representing a year-to-date decline of about 17.56%. The company's market capitalization stands at approximately ₹17,000 crore. The brokerage's assessment suggests that despite the stock's recent decline, its current trading price may offer an attractive entry point. The company's trailing twelve-month P/E ratio of 26-28x is considered fair when compared to many industry peers trading at higher valuations.
As reported by Moneycontrol, Chalet Hotels' operating performance excluding residential business was better than estimates with an EBITDA margin of 48.7% compared to the projected 45.0%. However, Revenue Per Available Room (RevPAR) declined 3.3% year-on-year to ₹10,544 due to occupancy dropping 7.7 percentage points to 68.2%. The decline was attributed to challenges from regional geopolitical conflicts affecting travel, ongoing construction at its Powai property, and renovations at the Four Points Sheraton in Vashi. The brokerage's assessment is based on operating performance that beat expectations, particularly its EBITDA margin of 48.7%, driven by strong leasing income.
According to the research report, Prabhudas Lilladher expects RevPAR CAGR of 11.2% over FY26-FY28E led by stabilization of transitory issues. The partial operationalization of Taj, Delhi by Q4FY27E is projected to drive 17.0% revenue CAGR in the hospitality business over the next two years. The company's long-term pipeline includes acquisition of a hotel in Udaipur with 144 keys and greenfield expansion in Hyderabad consisting of 330 keys. The annuity business is expected to witness addition of 0.9 million sq ft of leasing area by Q4FY27E, supporting the brokerage's forecast of 18% sales CAGR and 21% EBITDA CAGR from FY26 to FY28.
The overall analyst consensus for Chalet Hotels remains strongly positive, with most of the 20-22 analysts covering the stock recommending a "Strong Buy." The average 12-month price target is approximately ₹1017.30, indicating potential upside of over 28% from current levels. The brokerage's outlook shows confidence in the company's ability to execute its extensive pipeline and manage near-term operational challenges. Management's strategic focus on a high-value brand-ownership model and expanding brands like Athiva are key indicators for future performance, supported by a sector poised for sustained growth. The hospitality industry's positive trends align with Nomura's description of India's hospitality sector entering a "golden cycle" with sustained Average Daily Rate (ADR) growth.
