Chalet Hotels: Can the hotel stock break its 52 week high?

Synopsis:- A major hotel operator is trading close to ₹856 with a target of ₹1,120, indicating a potential upside of 31%. The occupancy level is at 68%, and the ARR has increased to ₹14,970. The annuity business indicates 83% leased occupancy and a monthly run rate of ₹24 crore. A capex pipeline of ₹2,500 crore is in place.

India’s hotels and resorts sector is booming, fueled by rising tourism and economic growth. In FY 2025, branded hotels hit 68% occupancy—the highest in years—with supply surging 9.3% to 196,464 rooms across 2,008 properties in 337 cities. A robust pipeline of over 114,000 rooms signals sustained expansion ahead.

With a market capitalization of Rs 18,607.80 crore, the shares of Chalet Hotels Ltd closed at Rs 849.85 per share, decreased around 0.34 percent as compared to the previous closing price of Rs 852.75 apiece.

Brokerage Recommendations

Axis Direct has initiated a ‘Buy’ rating on this hotel stock with a target price of  Rs 1,120 per share, which shows a potential upside of around 32 percent from the current level of  Rs 849.85. This stance reflects confidence in the brokrage in the company’s growth visibility, improving its operating metrics, and a strong pipeline.

According to the brokerage, the hospitality business registered a revenue growth of 23% YoY, driven by a 15.7% increase in ARR to  Rs 14,970, mainly due to 25% growth in non-MMR assets. However, occupancy fell 230 bps YoY to 68%, due to new supply additions in Bengaluru and Khandala.

The annuity business continued to be a bright spot, registering 29% YoY growth with 83% leased occupancy and a monthly run rate of approximately  Rs 24 crore, which is expected to increase to  Rs 28-30 crore in FY27E. The consolidated margins (excluding residential) remained flat at 46%, while the reported PAT of  Rs 124 crore was recorded.

Going forward, the brokerage pointed out that the company has an aggressive capex program of  Rs 2,500 crore over FY27-29 to enhance hospitality and commercial assets. Notably, key projects such as the Taj at Delhi International Airport and Hyatt Regency Airoli are on track, while strategic rebranding plans are expected to help improve ADR further.

In addition, the company is optimistic and concentrates on the upper upscale and luxury segments with a focus on an 80:20 business and leisure mix. The company is also confident that it will continue to see revenue and RevPAR growth as its new properties in Bengaluru and Khandala mature. Its “double engine strategy” of hospitality and commercial real estate, which earns it ₹3-4 billion every year, helps it to grow and acquire selectively.

Chalet Hotels Ltd is a major player in the Indian hospitality industry, owning upscale hotels in collaboration with international brands such as Marriott. The company pursues a dual growth model, focusing on hotel ownership as well as the development of commercial real estate in major metropolitan cities.

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