Buy Chalet Hotels, target price Rs 960: JM Financial

JM Financial has a buy call on Chalet Hotels with a target price of Rs 960. The current market price of Chalet Hotels Ltd. is Rs 859.7. Chalet Hotels, incorporated in 1986, is a Mid Cap company with a market cap of Rs 18745.47 crore, operating in Tourism & Hospitality sector.

Chalet Hotels' key products/revenue segments include Income from Rooms, Restaurants & Other Services, Lease Rentals and Other Services for the year ending 31-Mar-2024.



Financials
For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 464.46 crore, up 21.21% from last quarter Total Income of Rs 383.18 crore and up 22.26% from last year same quarter Total Income of Rs 379.89 crore. The company has reported net profit after tax of Rs 96.52 crore in the latest quarter.

The company's top management includes Mr.Hetal Gandhi, Ms.Radhika Piramal, Mr.Arthur William De Haast, Mr.Ravi C Raheja, Mr.Neel C Raheja, Mr.Sanjay Sethi, Mr.Hetal Gandhi, Mr.Joseph Conrad D'Souza, Ms.Radhika Piramal, Mr.Arthur William De Haast, Mr.Ravi C Raheja, Mr.Neel C Raheja, Mr.Sanjay Sethi, Mr.Joseph Conrad D?Souza. Company has B S R & Co. LLP as its auditors. As on 31-12-2024, the company has a total of 22 Crore shares outstanding.

Investment Rationale
JM Financial builds in single-digit ARR growth (7-8%) and 100bps improvement in occupancies each year over FY25E-27E for our coverage companies. Aided by brownfield acquisitions, greenfield developments in pipeline and growth in fee business, the brokerage is building in 12-15% growth in revenue overFY25-FY27E. The brokerage estimates 18-22% EBITDA growth for coverage companies in the same period, building in improvement in margins led by increasing contribution of higher margin/asset light business and positive operating leverage. They like the business model of Chalet Hotels and prefer to look at it from a 3-year view (when a large part of its pipeline would be commissioned).

Promoter/FII Holdings
Promoters held 67.42 per cent stake in the company as of 31-Dec-2024, while FIIs owned 7.52 per cent, DIIs 21.21 per cent.