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In 1QFY26, CHALET IN recognized residential revenues of Rs4,391mn with EBITDA margin of 37.1% and consequently reported results are not comparable on YoY basis or with our estimates. Excluding the residential business, CHALET IN’s operating performance was better than our estimates with EBITDA margin of 41.6% (PLe 39.3%) aided by 9.5% growth in RevPAR and strong traction in leasing income. Apart from continuing momentum in RevPAR, inventory addition of 30/390 rooms at Khandala/Delhi is likely to drive near term growth in hospitality business. Even the annuity business has started gaining traction (77% occupancy in 1QFY26) with an exit rental run-rate of Rs250mn in June-25 providing necessary cushion to cash flows. We have cut our EPS estimates by 5.3%/6.1% for FY26E/FY27E as we have re-aligned our depreciation assumptions and inauguration timeline of the hotel in Delhi. We expect sales/EBITDA CAGR of 17%/21% over FY25-FY27E and retain BUY” with a TP of Rs1,071 as we value the hotel business at EV/EBITDA multiple of 24x (no change in target multiple), annuity portfolio at a cap rate of 8.5% and the residential project at NAV of Rs17 per share.

RevPAR grew 9.5% YoY: Topline increased 147.8% YoY to Rs8,946mn aided by revenue recognition of Rs4,391mn from the residential project at Koramangala. However, excluding residential business, revenue increased 29.0% YoY to Rs4,659mn (PLe Rs4,326mn). Hospitality revenue was up 18.5% YoY to Rs3,856mn (PLe Rs3,633mn) while annuity revenue was up 105.9% YoY to Rs732mn (PLe Rs693mn). ARR increased 16.9% YoY to Rs12,207. RevPAR grew 9.5% YoY to Rs8,059 while occupancy stood at 66.0%.

EBITDA margin (adjusted for residential business) stood at 41.6%: EBITDA increased by 154.8% YoY to Rs3,573mn aided by contribution of Rs1,628mn from the residential business. However, core business EBITDA (adjusted for residential business) increased 38.2% YoY to Rs1,938mn (PLe Rs1,698mn) with a margin of 41.6% (PLe 39.3%). Hospitality/annuity EBITDA stood at Rs1,608mn/Rs608mn with a margin of 41.7%/83.1% respectively.

PBT of core business increases 35.3% YoY: PBT (excluding residential business) increased 35.3% YoY to Rs1,052mn (PLe Rs825mn) with a margin of 22.6% (PLe 19.1%). As tax incidence of core business is not reported separately, PAT comparison becomes inappropriate.

Con-call highlights: 1) 95 apartments at Vivarea, Koramangala (Bangalore) were handed over during 1QFY26 generating revenue/EBITDA of Rs4,391mn/Rs1,628mn respectively. 2) Another 58 units at Koramangala will be handed over in 2QFY26E. No further handovers are planned for FY26E. Possession of balance units is scheduled in FY27E. 3) Promoters had provided a cushion of Rs2,000mn towards Koramangala in the early stages and Rs400mn was repaid in 1QFY26. 4) Capex of ~Rs20bn has been planned till FY27E which will be primarily funded through internal accruals. 5) Chalet currently has ~3,300 operational rooms while ~1,200 rooms are in various stages of development, taking the total count to ~4,500 rooms. Target is to reach ~5,000 rooms by FY26E end indicating early visibility of addition of ~500 rooms beyond the current pipeline. 6) Leisure segment is expected to form 20% of portfolio mix. 7) EBITDA margins are expected to be better in phase-2 sales of Koramangala as new apartments are being sold at ~Rs20,000 per sq ft. 8) Occupancy for the annuity business is expected to stabilize at ~90% in coming quarters. 9) Net proceeds of ~Rs5bn are expected from Koramangala project over the next 2 years. 10) The contract segment, including airline crew business, formed ~11% of the total room revenue in 1QFY26.

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