Whalesbook
### The Growth Engine Ignites
Chalet Hotels navigated the third quarter of fiscal year 2026 with notable operational successes, even as its emerging residential business presented a temporary hurdle for year-over-year comparisons. Excluding this segment, the company delivered a strong EBITDA margin of 45.9%, surpassing analyst expectations and buoyed by an 11.8% increase in Revenue Per Available Room (RevPAR) and robust leasing income. While the company recognized ₹166 million in residential revenues with a 24.0% EBITDA margin, the core hospitality operations demonstrated resilience. This performance is occurring within a broader Indian hospitality sector projected for revenue growth of 13–14% in FY26 and 11–12% in FY27, driven by domestic demand and infrastructure improvements.
### Expanding Footprint and Strategic Valuations
The company's strategic expansion continues apace. Chalet Hotels added 129 keys in Bangalore during the first half of FY26 and brought 147 keys in Khandala fully online by mid-November. Further bolstering its long-term asset base, environmental clearance has been secured for a Hyatt-branded hotel in Airoli, signaling future greenfield expansion. The annuity business is also poised for growth, with plans to add approximately 0.9 million square feet of leasable area by the fourth quarter of FY27. Potential acquisition of a property in Udaipur, adding around 150 keys, remains a key near-term catalyst. Analyst firm Prabhudas Lilladher forecasts sales and EBITDA to grow at a Compound Annual Growth Rate (CAGR) of 18% and 22%, respectively, over FY25-FY28E.
Valuation Versus Peers and Analyst Conviction
Chalet Hotels currently trades with a trailing twelve-month P/E ratio in the range of 31x to 33x, placing it competitively within the hospitality sector. Peers like EIH Ltd. trade at a P/E of approximately 27x, while Indian Hotels and ITC Hotels command higher multiples around 55-58x and 47-49x, respectively. Prabhudas Lilladher maintains a BUY recommendation with a price target of ₹1,089. Their valuation methodology values the hotel business at 20x FY28E EBITDA (a slight reduction from 24x to account for rolling forward estimates), the annuity portfolio at an 8.5% cap rate, and the residential project at its Net Asset Value (NAV). This target suggests considerable upside from the current trading range of approximately ₹850-₹900, which has seen a 12.87% increase over the past year. The stock has a 52-week trading range of ₹634 to ₹1,082. The broader analyst community largely echoes this positive sentiment, with 10 out of 17 analysts rating the stock a Strong Buy and 5 rating it a Buy.