Initiating Coverage

TP Rs 295 Key Stock Data

Chalet Hotels BUY CMP Rs 206 Bloomberg / Reuters CHALET IN /CHAL.BO
Potential upside / downside 43% Sector Hotels
Coming out of the woods
Shares o/s (mn) 205
Summary V/s Consensus Market cap. (Rs mn) 42,214
We initiate coverage on Chalet Hotels (Chalet) with a BUY rating and TP of Rs295, EPS (Rs) FY23E FY24E Market cap. (US$ mn) 572
valuing hotels business at 17x EV/EBITDA and capitalization rate of 8.3% on retail– IDBI Capital 1.8 11.4 3-m daily avg Trd value (Rs mn) 87.0
commercial properties on FY24E. We like Chalet in domestic hospitality space Consensus 4.0 8.7 52-week high / low Rs215 / 125
considering 1) Strong positioning in high-end branded hotels in key business cities,
% difference (55.0) 31.0 Sensex / Nifty 59,885 / 17,823
2) Well positioned to benefit from post pandemic industry revival, 3) Active asset
management of the properties, 4) New hotels and commercial properties to strengthen
earnings growth, 5) Hotel-led complimentary mixed-use of real estate to drive Shareholding Pattern (%) Relative to Sensex (%)
operating margin expansion, 6) Value unlocking opportunities in Koramangla project Promoters 71.7 170.0
and 7) Inorganic growth opportunities. We expect on a low base of FY21, net sales to
FII 4.5 155.0
grow at a CAGR of 68% over FY21-24E supported by net sales CAGR of 77% and 42% in
DII 16.5 140.0
hotels and retail-commercial segment respectively. Cost optimization measures and
Public 7.3 125.0
increasing share of high margin commercial segment will drive EBITDA CAGR of 341%
110.0
over the same period.
95.0
Price Performance (%)
Key Highlights and Investment Rationale 80.0

Jun-20

Nov-20

Jun-21
Dec-20
Jul-20

Oct-20

Jul-21
Sep-20

Feb-21

Apr-21

Sep-21
-1m -3m -12m

Aug-20

May-21

Aug-21
Jan-21

Mar-21
 Strong positioning in high-end branded hotels in key business cities
Chalet has 7 fully operational hotels (including a co-located serviced residence) Absolute 27.8 14.6 44.7
Chalet Hotels Ltd. Sensex
representing 2,554 keys, located in the Mumbai Metropolitan Region, Hyderabad, Rel to Sensex 20.0 0.1 (14.2)
Bengaluru and Pune. The company has partnered with well-known global hospitality
players like “J W Marriott” and “The Accor” to run its properties under high-end Financial snapshot (Rs mn)
global brands. We believe the company’s strong positioning in high-end branded Year FY19 FY20 FY21 FY22E FY23E FY24E
hotels in key cities will pave the way for healthy sales growth. Revenue 9,872 9,808 2,944 5,856 9,619 13,949
 Well positioned to benefit from post pandemic industry revival EBITDA 3,192 3,429 70 1,668 3,543 6,044
After a massive revenue loss at the industry level in FY21, the domestic hotel industry EBITDA (%) 32.3 35.0 2.4 28.5 36.8 43.3
is expected to bounce back stronger, supported by vaccination drive and pent-up Adj. PAT (35) 1,194 (1,268) (907) 374 2,342
demand in the leisure travel. We believe initially the growth would be driven by leisure EPS (Rs) (0.2) 5.8 (6.2) (4.4) 1.8 11.4
segment and corporate segment will follow the suit. Chalet’s strong positioning in EPS Growth (%) - - - - - 526.6
business travel segment will drive RevPAR revival and aid net sales growth in future. PE (x) - 35.4 - - 113.0 18.0
 Multiple levers for sustainable earnings growth, BUY with a TP of Rs295 Dividend Yield (%) - - - - - -
We believe Chalet is poised to benefit from multiple levers viz active asset EV/EBITDA (x) 17.2 16.9 850.4 37.6 17.9 10.2
management of the assets, inventory addition in hotel and commercial segment, RoE (%) (0.4) 8.0 (8.5) (6.6) 2.8 15.8
mixed use of retail-commercial properties, inorganic growth opportunities and value RoCE (%) 7.2 7.5 (3.3) 1.1 5.8 12.1
unlocking opportunities in Koramangla project. BUY with a TP of Rs295. Source: IDBI Capital Research

Archana Gude | archana.gude@idbicapital.com | +91-22-2217 1938 

Jyoti Amonkar | Jyoti.amonkar@idbicapital.com | +91-22- 2217 1700 1
September 24, 2021
Chalet Hotels | Initiating Coverage

Global Travel and Tourism industry: Amongst the worst hit due to Covid-19 pandemic
Global travel and tourism (T&T) has played an important role in supporting economy and creating jobs. As per Statista
industry report, global T&T had an industry size of USD 9,259bn and accounted for 10.4% of global GDP in CY19. It also
created 334mn jobs, ~10.6% of all jobs and was responsible for creating 1 in 4 of all new jobs across the world. However,
Covid-19 disrupted T&T industry as countrywide lockdowns restricted travel and travel related activities and the industry
degrew by 49.6% YoY to USD 4,671bn. A sharp decline in international visitor spending by 69.4% YoY and 45% YoY lower
spending by domestic traveller led to drastic fall in total T&T industry size compared to 3.7% YoY decline in global GDP.
The pandemic had an unforeseen impact on all the segments of T&T and we believe its repercussions would last for
years to come as higher fixed cost of the business has led to cash burnout and weakening of balance sheet.

Exhibit 1: Sharp decline in industry size in CY20 amid global pandemic

10,000 11.7 13.4 20
8.6 7.7 6.9 5.1
5.3 2.4 4.8 3.3 2.8 10
8,000 (3.0)
(7.3) 0
6,000 -10
(49.6) -20
4,000 -30
-40
5,765

6,260

5,803

6,109

6,925

7,094

7,432

7,675

7,444

7,650

8,241

8,811

9,259

4,671
2,000
-50
- -60
CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20
T&T GDP Contribution (USD bn.) YoY Growth (%)
Source Statista industry report, IDBI Capital Research

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Chalet Hotels | Initiating Coverage

Our analysis of 2 decade’s global T&T industry suggests that before 2008-09 subprime crisis, T&T industry grew lower
than the GDP growth. In addition, the impact of subprime crisis was much deeper on T&T industry than the global GDP
in CY09. However, the industry bounced back stronger from CY10 and its growth momentum picked up on both revenue
as well as employment generation, until CY20 when global T&T faced Covid-19 pandemic. All the segments of T&T viz
hotels, restaurants, travel agents, air carriers suffered huge losses in CY20 owing to travel curbs by local authorities
across all the countries. Though situation improved by end of CY20 and some recovery was visible, second wave of
pandemic again led to travel restrictions. On a positive note, countries have embarked on vaccination drive, which may
boost travel confidence, though timeframe to come back to earlier growth trend is still just a gestimate.

Exhibit 2: Global T&T: Amongst the worst hit due to pandemic

3,40,000
6%
4% 3,20,000

2% 3,00,000
0%
2,80,000
-2%
2,60,000
-4%
-6% 2,40,000

CY06

CY08
CY00

CY01

CY02

CY03

CY04

CY05

CY07

CY09

CY10

CY11

CY12

CY13

CY14

CY15

CY16

CY17

CY18

CY19

CY20
T&T employment (000s) T&T GDP growth% Economy GDP growth
Source: WTTC, Global Economic Impact &Trends 2021, IDBI Capital Research

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Chalet Hotels | Initiating Coverage

Covid-19 marred business spending and international spending

The global travel industry was affected severely in CY20 due to unprecedented Covid-19 pandemic. International travel
restrictions, countrywide lockdowns and reduced spending on travel weighed on T&T industry. As per WTTC’s report,
domestic visitor spending decreased by 45% YoY to USD 2,360bn while international visitor spending declined by 69.4%
YoY to USD 518bn in CY20. This led to domestic visitor spending gaining the overall T&T spending from 72% of the total
T&T size in CY19 to 82% in CY20 and subsequently international spending declined from 28% to 18% in CY20.

Exhibit 3: Change in domestic and international spending analysis

CY19 CY20

18%
28.3%

71.7%
82%

Domestic spending International spending Domestic spending International spending

Source: WTTC, Global Economic Impact &Trends 2021, IDBI Capital Research

Exhibit 4: Change in leisure and business spending analysis

CY19 CY20

17.4%
21.5%

78.5% 82.6%

Leisure spenidng Business spending Leisure spenidng Business spending

Source: WTTC, Global Economic Impact &Trends 2021, IDBI Capital Research

4
Chalet Hotels | Initiating Coverage

In terms of T&T business loss, China and USA had 60% and 41% YoY de-growth, while UK and Japan T&T business was
significantly down by 62% and 37% respectively in CY20. European countries were badly hit as global tourism took a
pause and T&T business was down by 47%/51%/49% for Germany/ Italy/France respectively over last year. India’s T&T
business declined by 36% YoY to USD 122bn in CY20.

Exhibit 5: Top 10 countries’ Travel and Tourism contribution to GDP in CY19 and CY20 (in USD bn)
2,000 0%

1,600 -15%

1,200 -37% -36% -30%

-41% -47% -48% -45%
-51% -49%
800 -45%
-60%

305
-62%

241
270
1,870
1,104

1,666
400 -60%

176

149
235

115
667

209

132

123

191
122
373

393

91

81
- -75%
USA China Japan Germany Italy France India UK Mexico Australia
CY19 CY20 YoY Change (%)
Source WTTC, Global Economic Impact &Trends 2021, IDBI Capital Research

5
Chalet Hotels | Initiating Coverage

In terms of contribution to GDP, China was affected the most as T&T’s contribution to GDP in CY20 fell by 710bps YoY to
4.5%. Mexico and Italy were in the similar league as T&T industry size shrank and contribution to GDP fell by 650bps and
610bps respectively. In South Asian countries, Japan and India had 240bps and 220bps lower contribution from T&T to
total GDP in CY20.

Exhibit 6: YoY Change in T&T’s contribution to GDP for top 10 countries

16
14
12
10
8
6
4

11.6

13.1

10.1

15.0

10.7
7.0
8.6
5.3

4.5

7.1
4.7

9.8
5.5

8.5
4.7

6.9
4.7

4.2

8.5

6.0
2
0
United States China Japan Germany Italy France India United Mexico Australia
Kingdom
CY19 CY20
Source WTTC, Global Economic Impact &Trends 2021, IDBI Capital Research

6
Chalet Hotels | Initiating Coverage

We believe, amid pandemic in absence of outbound travel opportunities, domestic leisure travel is supporting the
hospitality industry. Even the corporate travel has taken a back seat as business meetings and MICE events took an on-
line way for majority of CY20. New concepts of travel like staycation, bizcation evolved over the time and people
preferred to go to drivable distance for hotel stay. Our analysis of travel categories suggest that Japan’s international
travel was the worst hit amongst the peers while France still managed to garner 33% of revenue from international
travel business in CY20.

Exhibit 7: Travel ban across the globe increased dependency on domestic travel in CY20
120

100 6 5
12 12 11 15 15 9
19
80 33

60
94 88 95 88 89 91
40 81 85 85
67
20

0
Country United States China Japan Germany Italy France India United Mexico
Kingdom
Domestic travel International travel
Source WTTC, Global Economic Impact &Trends 2021, IDBI Capital Research

7
Chalet Hotels | Initiating Coverage

In terms of change in travel spending by domestic and international travellers, Japan had the lowest decline in spending
by domestic travellers, while it had the highest decline in spending by international travellers. UK’s sharp decline in total
T&T industry size in CY20 was owing to higher cut in travel spending by domestic and international travellers by 63% and
72% respectively over CY19. China too witnessed higher decline in travel spending by domestic and international
travellers to the tune of 61% YoY and 66% YoY, while for USA domestic travel supported to a large extent and it degrew
by 37% YoY and international travel spending was lower by 77% YoY. India too got a support from domestic travellers as
travel spending by domestic traveller was down by 31% YoY, while international traveller spending declined by 61% YoY.

Exhibit 8: Spending change in CY20 in domestic and international travellers

0

-37 -30 -31

-47 -50 -50 -48 -41
-30 -61 -63

-60 -61
-77 -83 -58 -53 -49
-62 -77
-90 -66
-72

-120
United States China Japan Germany Italy France India United Mexico Australia
Domestic traveller International traveller Kingdom

Source: WTTC, Global Economic Impact &Trends 2021, IDBI Capital Research

8
Chalet Hotels | Initiating Coverage

Back home, India’s T&T industry resembled impact of Covid-19 pandemic as total industry size declined by 36.2% YoY to
USD 121.9bn. The country grappled with unforeseen impact on hospitality as restriction on travel weighed on all the
segment of T&T viz hotels, restaurants, travel agents, tour operators etc. The industry has meaningful contribution to
the country’s GDP and it is expected to do well as situation normalizes and domestic travel picks up, though at a
staggered manner. As per IBEF travel industry report, domestic T&T industry is expected to grow at a CAGR of 17.3%
over CY20-29E to reach at USD 512bn.

Exhibit 9: Contribution to GDP till FY20

600

500

400

300

200

100
220 232 247 191 122 512
-
CY16 CY17 CY18 CY19 CY20 CY29F
Total Contribution of T&T to GDP at Real 2019 Prices (US$ billion)
Source: IBEF industry report, IDBI Capital Research

9
Chalet Hotels | Initiating Coverage

Hotelivate has further done domestic travel industry analysis, which indicates that sharp decline in occupancy amid
travel ban has pulled down ARR significantly. Particularly luxury segment witnessed sharp decline in occupancy and ARR
led by cost cutting on both leisure and corporate side. On the other side, economy segment too witnessed decline in
occupancy and ARR, resulting in 75% YoY erosion in RevPAR to Rs448. Our interaction with industry experts shows that
revival in hospitality industry would kick in soon as vaccination drive will reinstate travel confidence. We believe leisure
segment will be first to show recovery aided by domestic travellers, while business travel may be a laggard owing to
reduced corporate travel amid pandemic.

Exhibit 10: ARR, RevPAR and OR comparison

Particulars ARR RevPAR Occupancy Rate%
FY20 FY21 P* FY20 FY21 P* FY20 FY21 P*
Luxury 12093 8640 7570 2523 62.6 29.2
Upscale 7415 5425 4983 1834 67.2 33.8
Midscale 4729 2905 3135 1072 66.3 36.9
Economy 3007 1630 1837 448 61.1 27.5
Source: Hotelivate, IDBI Capital Research *Predicted

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Chalet Hotels | Initiating Coverage

Thrust on vaccination is driving occupancy growth in developed countries

We have analyzed population vaccinated and hotel occupancy trend since beginning of CY21 to understand the impact
on hotel industry. In USA, the vaccination picked up pace from early January, 21 and it reached 54% of total population
by July,21. Hotel occupancy showed strong uptrend, as vaccination drive boosted travel confidence. In UK, population
vaccinated reached to 63.6% in July,21. However, ban on foreign travellers has kept occupancy level suppressed at
50.9% during the same month. We believe in near term, domestic hospitality growth will be driven by domestic
travellers and the countries dependent on international tourist for hospitality growth will have to wait untill things get
back to normalised level.

Exhibit 11: USA Occupancy and Vaccination Exhibit 12: UK Occupancy and Vaccination
80% 69.6% 70% 63.6%
66.1% 58.1%
70% 59.3% 60%
54.6% 57.5%
60% 51.0% 54.0% 48.6%
45.3% 46.0% 50%
50% 36.5% 50.9%
36.7% 39.3% 37.4% 40% 32.0% 45.0%
40% 28.0% 43.1%
23.1% 30% 20.0%
30% 30.0%
20% 11.3% 20% 26.2%
4.8%
10% 0.6% 10% 15.6%
0% 0% 7.1%
Dec-20

Jun-21

Jul-21
Feb-21

Apr-21
Mar-21

May-21
Jan-21

Jan-21

Jun-21

Jul-21
Feb-21

Apr-21
Mar-21

May-21
Occupancy(%) Population Vaccinated (%) Occupancy(%) Population Vaccinated (%)

Source: STR, Bloomberg, IDBI Capital Research Source: STR, Bloomberg, IDBI Capital Research

11
Chalet Hotels | Initiating Coverage

India has reached population vaccinated level to 17.1% till July,21. The country witnessed strong rebound in occupancy
as Covid-19 first wave subsided and occupancy reached to 53.9% in February,21. However, it declined from March,21 as
the country witnessed onset of second wave of Covid-19. As population vaccinated increases further, we believe
domestic travel is poised to bounce back stronger, initially in leisure segment and later followed by the business
segment.

Exhibit 13: India Occupancy and Vaccination

60% 53.9%
50.0% 50.0%
50%

40% 35.0%
31.0%
30% 21.5%
17.1%
20% 12.3%
5.7% 7.9%
10% 2.3%
0.5%
0%
Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21
Occupancy% Population Vaccinated (%)

Source: STR, Bloomberg, IDBI Capital Research

12
Chalet Hotels | Initiating Coverage

FTA to be allowed soon to visit India as Covid-19 cases fall drastically

Amid a decline in Covid-19 cases in the country, India may soon reopen its doors for foreign tourists for the first time in
one-and-a-half years. A formal announcement allowing foreign tourists to visit India may come within the next 10 days,
an official from the Home Ministry said. Also, first five lakh foreign tourists will be issued visas free of cost in an attempt
to revive the tourism, hospitality and aviation sectors badly hit by the covid-19 pandemic. This will be positive for hotels
servicing to foreign tourists including Chalet.

Exhibit 14: India’s Daily Covid-19 cases on a declining trend

400 364.9
350
300
250 185.0
200
150
74.7 82.9
100 50.2 45.6 62.0 46.9
40.8 40.4 43.9 30.6
50 7.4 18.5 19.8 12.8 15.3
0.1 1.7
0

Jun-20

Jun-21
Jul-20

Jul-21
Apr-20

May-20

Nov-20

Jan-21

Apr-21

May-21

Sep-21
Aug-20

Aug-21
Mar-20

Sep-20

Dec-20

Feb-21

Mar-21
Oct-20
India's Daily Covid Cases (,000)

Source: Worldometer, IDBI Capital Research

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Chalet Hotels | Initiating Coverage

India’s T&T industry: Long-term growth drivers intact

Though the domestic T&T industry witnessed a sharp fall in revenue in CY20, we believe the industry is poised to benefit
in a long term horizon, supported by growth levers like increasing urban population, higher per capita income and
improvement in discretionary spend.
India is one of the fastest growing economies, backed by healthy growth in the services sector. The country boasts of
healthy working population ratio. However, due to second wave of covid-19, IMF has slashed India’s GPD growth
projection for 2021-22 from earlier estimate of 12.5% to 9.5%. Despite the cut in projection the country is expected to
remain the fastest growing large economy followed by China. In terms of per capita income, after a blip in CY20, it is
expected to reach USD 3,209 in CY24E. This translates to a healthy CAGR growth of 6.6% over CY12-24E. We believe
strong rebound in economic activities and spending on infrastructure, real estate, manufacturing and services will drive
healthy growth in per capita income in future.

Exhibit 15: GDP per capita at current prices estimates

3,500
3,000
2,500
2,000
1,500
1,000

2,014
1,482

1,485

1,610

1,639

1,761

2,037

2,171

2,338

2,529

2,737

2,965

3,209
500
-
CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20E CY21E CY22E CY23E CY24E
GDP per capita at current prices ($US)
Source: IBEF industry report, IDBI Capital Research

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Chalet Hotels | Initiating Coverage

Rising urbanization
With increasing awareness about higher education and white collar jobs in manufacturing and services industry, people
shifted base from small villages to towns. This rapidly spreading urbanization bodes well for the growth of hospitality
industry as it gives easy access to infrastructure like airports and railways, which in turn converts in increased tourism.
As per IBEF report, the country’s urban population is expected to grow at a CAGR of 2.7% over CY15-25E to touch 543mn
population. The increased urban population also means higher per capita income for people migrated, leaving higher
cash for disposable income.

Exhibit 16: Population breakdown of India

1000

800

600

400

200
429 880 461 893 483 900 543 909
0
CY15 CY18E CY20E CY25E
Urban (in mn) Rural (in mn)
Source: IBEF Industry report, IDBI Capital Research

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Chalet Hotels | Initiating Coverage

Healthy growth in domestic travellers-key to industry growth

Domestic travellers are backbone of domestic hospitality industry. The Central Government’s various initiatives to
promote tourism as well as the State Government’s thrust on attracting more visitors has catapult growth trajectory. As
per Ministry of Tourism, number of domestic tourist visits in India is on uptrend and the industry reported a healthy
CAGR of 12% over CY13-19 in terms of total domestic tourist visits at 2,323mn.

Exhibit 17: Domestic tourists visits in India

2,500

2,000

1,500

1,000

1,143

1,283

1,432

1,615

1,658

1,854

2,323
500

-
CY13 CY14 CY15 CY16 CY17 CY18 CY19
Domestic tourists visits in India (in mn)
Source: Ministry of Tourism, IDBI Capital Research

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Chalet Hotels | Initiating Coverage

India’s well spread geography to aid regional tourism

The country is blessed with diverse tourist locations, which are key attractions for domestic tourist visitors (DTV). UP has
the highest share of 23.1%, followed by Tamil Nadu at 21.3%. Maharashtra, West Bengal and Andhra Pradesh follow the
suit with 6.4%, 4% and 3.8% share of DTV. Interestingly, these 5 states contribute to over 58.6% of total DTV share,
leaving huge scope for other states to take necessary measures with that regards.

Exhibit 18: State wise % share of Total DTV in CY19

25 23.1
21.3
20

15 13

10
6.4
4 3.8 3.6
5 2.5 2.2

0
Uttar Pradesh Tamil Nadu Others Maharashtra West Bengal Madhya Telengana Gujarat Rajasthan
Pradesh

Source: Ministry of Tourism, IDBI Capital Research

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Chalet Hotels | Initiating Coverage

India’s inbound tourism is still at a nascent stage

Though the country’s DTVs is burgeoning, there is a lot more scope to improve number of inbound travellers. And
hence, the Government launched e-Tourist Visa and now the facility is extended to citizens of 171 countries, as of
March,21. After a consistent growth in FTAs till CY19, Covid-19 pandemic disrupted the travel and tourism industry and
in CY20, FTAs decreased by 75.5% YoY to 2.7mn. We believe ban on international travellers may lift soon as there is
sharp decline in Covid-19 cases in the country.

Exhibit 19: Foreign Tourist Arrival in India

10.6 10.9
10.0
8.8
7.7 8.0
6.6 7.0
6.3
5.8
5.1 5.3 5.2
4.5
3.9
2.7

CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20
Foreign tourist arrivals in India (in mn)
Source: Ministry of Tourism, IDBI Capital Research

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Chalet Hotels | Initiating Coverage

T&T has been an integral part of the Government’s policies over the years as the industry is 3rd largest foreign exchange
earner for the country and created 31.8mn jobs in CY20. The central as well as the state governments has dedicated
departments to focus growth of the travel and tourism. As per PIB, the central Government’s budget allocation on
tourism has been on uptrend until the industry grappled with pandemic in CY21. However, we believe budget allocation
will increase in CY22E as hospitality industry gradually recovers.

Exhibit 20: Budget allocation to tourism under union budget

25
21.1 21.9
20.3
20 17.7
15.7 16
15 12.6

10

0
FY16 FY17 FY18 FY19 FY20 FY21 FY22 E
Budget Allocation (in Rs bn)

Source: PIB, IDBI Capital Research

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Chalet Hotels | Initiating Coverage

KEY CHALLENGES FOR HOTEL INDUSTRY:

 Further extension of lockdown: Covid-19 has brought an unprecedented downfall to the global T&T industry.
Further, virus mutation is elongating the wait to come out of the pandemic completely. Though vaccination drive
and awareness about necessary precautionary protocols is increasing travel confidence, we believe the industry is
still concerned about new variants of the virus and its possible impact on the travel and tourism industry.
 Availability of land, location of land and high cost: The industry faces challenges on land availability as well as high
cost and location. These things put limitations on hotel development and its viability. Moreover, cost of land in
demand dense market is soaring high. Apart from that, some end use restrictions and limited development rights
become entry barrier for new hotel developers.
 Regulatory approvals: Several regulatory approvals are required before implementing the hotel project. It is a time
consuming process of taking the regulatory approvals, which can increase the time span of the hotel development
lifecycle. Some approvals may or may not get on time resulting in project delay, affecting return on capital
employed.
 Huge capital requirement: Hotel industry is an asset heavy business. Building a hotel in good location with required
facilities requires huge capital expenditure. Also, payback period is higher as initially occupancy would be on a lower
side. This drags overall return on capital employed of a hotel project. This makes a hotel operator to take a prudent
decision to either build a hotel or go for management contract for running a hotel.

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Chalet Hotels | Initiating Coverage

Investment Rationale
Strong positioning in high-end branded hotels in key business cities
Chalet Hotels is an owner, developer and asset manager of high-end hotels in key metro cities in India and caters to the
luxury-upper upscale and the upscale hotel segment. The company has 7 fully operational hotels (including a co-located
serviced residence) representing 2,554 keys, located in the Mumbai Metropolitan Region, Hyderabad, Bengaluru and
Pune. The company has partnered with well-known global hospitality players like “J W Marriott” and “The Accor” to run
its properties under high-end global brands like JW Marriott, The Westin, Marriott, Renaissance and Four Points.
Chalet’s ~85% room inventory caters to 5 star/Deluxe category while remaining falls under 4-5 star category.
The company has developed hotels at strategic locations with high barriers-to-entry like JW Marriott, Sahar, Mumbai
and Renaissance and Marriott Executive Apartments, located across 15 acres at the banks of Powai lake, both in
proximity to Mumbai’s international airport. Similarly, Four Points by Sheraton Vashi, Navi Mumbai is located close to
new business districts and the proposed international airport. The Westin, Hyderabad and Marriott, Bengaluru are
located near the offices of major technology corporations, business centers and retail and commercial facilities. We
believe Chalet’s strong positioning in high-end branded hotels in key business cities bodes well for sustainable earnings
growth in future.

Exhibit 21: Inventory breakup-City wise Exhibit 22: Inventory breakup- Hotel category wise

223
375

391

1,513
427

2,179

MMR Hyderabad Bengaluru Pune 5 Star/Deluxe Luxury 4-5 Star

Source: Company data, IDBI Capital Research Source: Company data, IDBI Capital Research

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Chalet Hotels | Initiating Coverage

Well positioned to benefit from post pandemic industry revival

The domestic hotel industry reported an uptrend in occupancy and ADR supported by many levers like economic
growth, up-tick in domestic leisure travel, higher FTAs and encouraging growth in corporate travel. As per the industry
report, organized hotel industry reported ADR CAGR of 2.3% over FY16-20, while occupancy improved by 210bps over
the same period. However, the industry witnessed an unprecedented covid-19 pandemic in the beginning of March, 20
which led to nationwide lockdown and weighed on hotel business. Leisure and business demand was majorly replaced
by quarantine facilities for overseas passengers and rooms for medical staff during Q1FY21. With easing of lockdown
and reduced covid-19 cases, the industry saw revival in occupancy in H2FY21. It is projected that the organized industry
had a significant drop of 33.5% YoY in ADR and 3,160bps decline in occupancy at Rs4,031 and 33.8% respectively. After a
massive revenue loss at the industry level in FY21, the industry is expected to bounce back stronger, supported by
vaccination drive and pent-up demand in leisure travel. We believe initially the growth would be driven by leisure travel
and corporate segment will follow the suit sooner than later. As per the report, the industry is expected to touch
occupancy level of 64.9% and ADR of Rs5,618 in FY23E. Our analysis suggests that the industry may surpass to its pre-
Covid occupancy/ADR in FY24E as leisure, corporate as well as foreign tourists drive demand.

Exhibit 23: Organized hotel industry-ADR & Occupancy

7,500 80%
64.8% 65.7% 66.7% 65.4% 64.9%
63.3%
6,000
52.4% 60%
4,500 33.8%
40%
3,000
20%
5,527

5,671

5,768

5,973

6,061

4,031

5,016

5,618
1,500

- 0%
FY16 FY17 FY18 FY19 FY20 FY21P FY22F FY23F
ADR Occupancy

Source: Company data, Industry data, IDBI Capital Research

22
Chalet Hotels | Initiating Coverage

Chalet had been a consistent outperformer compared to the organized industry on both occupancy and ADR front in the
past and the difference between the industry average and the company is meaningful. The company’s strong foothold in
luxury business segment in key business cities has been instrumental in driving outperformance on operational
parameters. For instance in FY20, Chalet’s occupancy was higher than 600bps compared to the industry average, while
ADR was higher by 40%. We believe the company is poised to get back to its earlier growth trend led by occupancy/ADR
improvement.

Exhibit 24: Chalet & India-Organized inventory- Exhibit 25: Chalet and India-Organized inventory-ADR-
Occupancy Check data
90% 9,000
80% 8,000
70% 7,000
60% 6,000
50% 5,000
40% 4,000
30% 3,000
20% 2,000

8,482
7,840

5,765

8,210

5,973

6,061

4,040

4,013
65%

71%
73%

77%

66%

65%

30%

34%
10% 1,000
0% -
FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21
Chalet India-Oraganised inventory Chalet Hotel India-Organised inventory

Source: Company data, Industry data, IDBI Capital Research Source: Company data, Industry data, IDBI Capital Research

23
Chalet Hotels | Initiating Coverage

Active asset management: A key to outperformance

Unlike a typical management contract where a hotel owner has no major role in operations of the hotel, Chalet follows
an active asset management model for all its properties. Being partnered with the leading global hospitality partners
give the company access to management expertise of Marriott and Accor, industry best practices, online reservation
systems, marketing strategies, systems and processes and operational know-how. Chalet engages with the hotel
management team at each hotel in order to discuss and agree on budgeting, cost management initiatives and
operational and financial targets for each of its hotel properties. It reviews performance reports generated by each
hotel, conducts periodic meetings with hotel operator’s management teams and discusses and optimizes pricing
strategies to maximize room yield by monitoring of key corporate accounts and provide inputs on promotional activities.
We believe Chalet’s active role in hotel operations has resulted in outperformance in key parameters like employee to
room ratio and EBITDA margins.

Exhibit 26: Chalet’s employee to room ratio analysis Exhibit 27: EBITDA margin analysis
1.5 40

1.2
30

0.9
20
0.6

10
0.3

28.1

32.3
30.8

16.3

30.7

18.4

35.0

36.4

21.7
1.3 1.2 1.2 1.0 0.7
0.0 0
FY17 FY18 FY19 FY20 FY21 FY18 FY19 FY20
Staff to room ratio Chalet Hotel LTH IHCL

Source: Company data, IDBI Capital Research Source: Company data, IDBI Capital Research

24
Chalet Hotels | Initiating Coverage

Room inventory and commercial space addition to strengthen earnings growth

The company is focused on expanding room inventory by organic/inorganic route for future growth prospects. Chalet is
strengthening its presence at existing operational cities by developing 2 hotels in Mumbai and 1 in Hyderabad. It is also
expanding room inventory by 88 rooms in its Pune hotel. In order to leverage unutilized FSI, the company is developing
commercial space in Powai, Mumbai and an IT Park in Whitefield, Bengaluru located on unutilized land at hotel
properties. In order to preserve cash, the management delayed new projects amid pandemic. Once the situation
normalizes, these hotels and retail-commercial space should be operational and drive healthy earnings of the company.
Post completion of new hotels and expansion at Novotel, Pune the company’s total room inventory would go up from
current 2,554 rooms to 3,222 rooms. Commercial segment will add 1.2mn sqft taking, total space to 2.1mn sqft.

Exhibit 28: Room inventory addition

Brand Location Rooms Ownership interest
Westin Hyderabad 170 Leasehold rights
Hyatt Regency Airoli, Navi Mumbai 260 Leasehold rights
W Powai, Mumbai 150 100% ownership
Novotel Pune 88 100% ownership
Source: Company data, IDBI Capital Research

Exhibit 29: Commercial space addition

Project Name Location Build up Area (Sq.ft) Expected opening date
Commercial tower, Renaissance Complex Powai, Mumbai ~0.75mn Q4FY23E
Commercial tower, Marriott Complex Whitefield, Bengaluru ~0.45mn Q4FY22E*
Source: Company data, IDBI Capital Research

25
Chalet Hotels | Initiating Coverage

We have analyzed Chalet’s market share in the organized inventory space in the cities it operates to understand its
positioning. Post new inventory addition, the company will have a healthy 12.1% market share in MMR. In
Bengaluru/Hyderabad/Pune it will have a market share of 2.3%/ 7.8%/4.4% respectively. We believe Chalet’s prominent
positioning in the key business cities paves the way for sustainable RevPAR growth in future.

Exhibit 30: Market share in operational cities post inventory addition

Particulars MMR Bengaluru Hyderabad Pune
Chalet's inventory post expansion 1,923 391 597 311
Organized hotel chain inventory by FY23E 15,922 17,093 7,651 7,124
Chalet's market share (%) 12.1 2.3 7.8 4.4
Source: Hotelivate, IDBI Capital Research, Note: The supply for FY23 has been computed by adding the active future supply to existing base rooms in FY18

26
Chalet Hotels | Initiating Coverage

Hotel-led complimentary mixed-use of real estate to drive operating margin expansion

Chalet also develops retail and commercial office space adjacent to hotels in order to optimize use of available land
parcel, to generate regular rental income and cushion the cyclical hospitality segment. Retail and commercial segment
also complement the hospitality business and generate synergies within the hotel led mixed-use projects. We believe
the company’s strategy to develop retail and commercial asset is a prudent call to safeguard net sales as hospitality
business is cyclical in nature unlike regular rental income of retail and commercial space. Further, this segment attracts
better operating margin and aids overall margin expansion at consolidated level. Chalet’s retail and commercial space
has increased from 260K sqft in CY12 to 866K sqft in CY18. It has 2 more commercial projects under development which
will take total area in retail-commercial segment to 2,066K sqft in CY24E.

In terms of net sales its contribution to net sales increased from 3% in FY18 to 11% in FY20. We expect it to reach to 19%
in FY24E as both the projects under pipeline gets operational. On EBITDA margin front, as utilization increased, the
segment’s EBITDA margin improved from 29% in FY18 to 57.1% in FY20. With increased rentals and operating cost
optimization initiatives, we expect EBITDA margin to reach 70% in FY24E.

Exhibit 31: Healthy growth in retail and commercial Exhibit 32: Net sales and EBITDA margin analysis
space
2,500
3,000 78.3 90

2,000 2,500 65.0 75

57.1 60.0
2,000 70.0 60
1,500
1,500 45
1,000 29.0
1,000 23.8 30

391

1,081

1,081

1,666

2,671
500 500 15

241

926
260 369 866 1,316 2,066
- - 0
CY12 CY14 CY18 CY23E CY24E FY18 FY19 FY20 FY21 FY22E FY23E FY24E
Retail and commemrcial area ( in ,000 sqft) Net sales (Rs mn) EBITDA margin (%)

Source: Company data, IDBI Capital Research Source: Company data, IDBI Capital Research

27
Chalet Hotels | Initiating Coverage

Koramangla project: Value unlocking opportunities in offing

Chalet has a residential project at Koramangala Industrial Layout, Bengaluru. The property is located within the
proximity of an aerodrome operated by the Hindustan Aeronautics Limited (HAL). HAL is responsible for the issuance of
no-objection certificates (NOC) related to the height of structures in the vicinity of the aerodrome. HAL granted their
NOC on October 28, 2011 for the development of a 17 floor residential building with height up to 62 meters on the basis
of which Chalet had started development of the Koramangala Project and had allotted apartments to several customers.
Thereafter, the NOC granted was cancelled by HAL on August 16, 2013. At the time of such cancellation of the NOC, five
wings with 17 floors had been constructed up to the height of 62 meters and more than 200 apartments were allocated
by the company. On Chalet’s petition against HAL’s order before the Karnataka High Court, the High Court passed an
interim order on October 23, 2013 directing the company not to modify/alter/renovate/develop the property above 40
meters from ground level and not to sell or agree to sell or enter into an agreement with third parties in any manner
whatsoever in respect of any portion of the Property above 40 meters. The Karnataka High Court passed a further order
on July 31, 2014 and another on November 5, 2015 directing the Airport Authority of India (AAI) to conduct an
aeronautical study of the Bengaluru aerodrome as per the notified parameters of HAL airport and the requisite
government notification. The AAI issued its report on January 27, 2016 confirming that full height of the completed
building-wings up-till then was permissible as it did not adversely affect aircraft operations.
To avoid further delay, the management has decided to cap the height of 12 building in the project to 10 floors and 2
building to 11 floors. In order to utilize FSI, the company is building a commercial area of 1.5lac sqft which is expected to
be sold for ~Rs4,500mn. In residential project 83 flat owners have confirmed that they will continue with the project and
have accepted to come down to below 10 floor, while 9 flat owners have cancelled their ownership of flats. The project
has 8.5lac sqft of sellable area and out of which 2.8lac sqft is already sold. The management guided that the remaining
area can fetch a rate of Rs12,500/sqft and contribute ~Rs7,000mn to net sales. Chalet is in talks with HAL for agreement
on proposed changes and further approval from the local authority will be sought. We believe that Koramangla project,
once completed, will be a value accretive for stakeholders.
Opportunity for reflagging hotels- Another lever to earnings growth
Chalet does agreement with the hotel operators to rebrand the hotel once the license agreement is due for renewal.
This provides the company with an opportunity to rebrand hotel assets or reposition properties by using alternate
brands at these hotels to better cater to expected demand in the respective micro markets where hotels are located.
The management has decided to upgrade Renaissance in Powai, Mumbai to Westin brand under Marriott umbrella. We
believe this move will result in improved RevPAR and drive higher net sales as well margin improvement.

28
Chalet Hotels | Initiating Coverage

Inorganic opportunities in leisure segment and new geographies: Another key to growth
The company has strong presence in business travel segment in key cities viz. MMR, Pune, Hyderabad and Bengaluru.
However, the company is keen to enter into leisure segment and new geographies through inorganic opportunities. The
management can leverage its experience and in-house capabilities to acquire operational or near complete hotel assets
at an attractive price, initiate turnaround strategies through active asset management, brand repositioning, property
enhancement or cost controls and derive benefits of economies of scale. Earlier, the company said that they are keen to
enter in leisure segment of Goa or business segment of Delhi, if an opportunity strikes at an attractive valuation. After a
massive business loss during pandemic, many hotels are struggling for survival and we believe may opt for asset sale to
fulfill debt obligation. This creates ample opportunities to players like Chalet to select the right fit from many such
assets.

29
Chalet Hotels | Initiating Coverage

Financial analysis
Healthy sales growth driven by recovery in hotels and commercial business
After a substantial business loss led by Covid-19 pandemic, we anticipate business to revive from H2FY22E. Our analysis
of overall hotel RevPAR recovery in key markets like USA, UK and China suggest that vaccination drive is getting back the
travel confidence amongst the leisure travellers. Though corporate segment is currently laggard, we believe as economy
is opening up and businesses are getting back to earlier path, business travel will start flourishing in a meaningful way.
Further, Chalet’s long term association with key clientele will aid the company to regain the fast-track growth mode
sooner than later. The company has taken prudent call to downsize retail segment and convert that into commercial
space at its The Orb, Sahar property. Also, its new commercial properties at Bengaluru and Mumbai would be
operational by FY23E and drive higher sales growth in future. We estimate net sales to grow at a CAGR of 68% over
FY21-24E. In terms of revenue contribution, retail and commercial revenue contribution in total sales to grow from 11%
in FY20 to 19% in FY24E as 2 new commercial properties at Bengaluru and Mumbai get operational in FY23E.

Exhibit 33: Net sales analysis Exhibit 34: Segment revenue breakup
15,000 99 120 12,000

64 90 10,000
12,000
45 60
8,000
9,000 30
-1 6,000
0

2,671
6,000
4,000

1,666
1,194
-30

1,081
1,024

11,278
13,949
3,000

8,911

2,017

4,776

7,953
2,000
9,808

2,944

5,856

9,619
-60
-70
- -90 -
FY20 FY21 FY22E FY23E FY24E FY20 FY21 FY22E FY23E FY24E
Net Sales (Rs mn) YoY Growth (%) Hospitality (Rs mn) Retail and Commercial (Rs mn)

Source: Company data, IDBI Capital Research Source: Company data, IDBI Capital Research

30
Chalet Hotels | Initiating Coverage

Hotel business revival and Retail and Commercial segment to drive margins expansion
As the domestic industry struggled during pandemic, Chalet too was no exception and could barely report positive
EBITDA of 2.4% compared to 35% in FY20. Further, higher interest cost and depreciation weighed on the bottom line.
However, we believe the company is poised to come back to earlier growth trend as travel segment revives on both ADR
and occupancy front. Chalet’s prudent cost optimization initiatives on parameters like payroll cost, electricity cost and
other operating cost will continue and should drive sustainable EBITDA margin improvement in future. Further,
commercial segment has higher EBITDA margin and its increasing share in total sales will support margins expansion. We
estimate EBITDA margin to reach 43.3% in FY24E as a mix of revival of hotel business and incremental share of high
margin commercial segment.

Exhibit 35: EBITDA and PAT margins analysis Exhibit 36: Segment margin analysis
60
43.3 80 71 70
35.0 36.8 65
40 28.5 60
60 52
20
2.4
16.8 40
0 12.2
3.9 38 37
20 31
-20
-15.5 22

-40 0

-43.1
-60 -20 -11
FY20 FY21 FY22E FY23E FY24E FY20 FY21 FY22E FY23E FY24E
EBITDA Margin (%) PAT Margin (%) Hospitality Margin (%) Retail and Commercial Margin (%)

Source: Company data, IDBI Capital Research Source: Company data, IDBI Capital Research

31
Chalet Hotels | Initiating Coverage

Valuation and Outlook

We expect on a low base of FY21, net sales to grow at a CAGR of 68% over FY21-24E supported by CAGR of 77% and 42%
in hotels and retail-commercial segment respectively. Cost optimization and higher operating margin of retail and
commercial segment will drive EBITDA CAGR of 341% over the same period. We forecast EBITDA margin expansion of
4,090bps over FY21-FY24E and net profit margin to come in positive territory to 16.8% in FY24E compared to net loss
margin of 43% in FY21.
We do SOTP valuation of the stock by assigning 17x EV/EBITDA to hotel business and capitalization rate of 8.3% to retail
and commercial assets on FY24E. We initiate coverage on Chalet with a BUY rating and price target of Rs295.

Exhibit 37: SOTP Valuation

Particulars (Rs mn)
A. EBITDA 6,044
B. Retail and Commercial net sales 2,671
EBITDA for TP Calculation (A-B) 3,373
EV/EBITDA multiple-17x 57,340
EV of retail and commercial assets
NOI 1,870
Capitalization rate 8.3%
EV of retail and commercial assets 22,662
Net debt 19,493
Total 60,509
No of shares (mn) 205
TP (Rs) 295
Source: Company data, IDBI Capital Research

32
Chalet Hotels | Initiating Coverage

Exhibit 38: 1 yr forward EV/EBITDA chart

300,000
250,000
200,000
150,000
100,000
50,000
-

Dec-19

Feb-20

Sep-20
Feb-19

Apr-19

Jun-19

Apr-20

Jun-20

May-21
Oct-19
Aug-19

Jan-21

Mar-21
Jul-20

Nov-20

Jul-21
(50,000)

EV 25X 50X 75X 100X

Source: Company data, IDBI Capital Research

33
Chalet Hotels | Initiating Coverage

About the company

Part of the K Raheja Corp group, Chalet Hotels Limited is an owner, developer, asset manager and operator of high-end
hotels and hotel led mixed-use developer in key metro cities in India, Mumbai Metropolitan Region, Hyderabad,
Bengaluru and Pune. Chalet focuses on driving business efficiencies right from the pre-development stage through the
lifecycle of the asset and, maximizing returns on every square foot owned and operated. The portfolio comprises seven
fully operational hotels with 2,554 keys, across mainstream and luxury segments, and four commercial and retail spaces,
representing 0.9 mn sqft. in close proximity to the hospitality assets. The company has proposed development pipeline
of 3 additional hotel with total of ~660 keys and 2 commercial and retail space with combined build up area of
1.2 mn sqft.

Exhibit 39: Segment revenue contribution

100% 88%

80%
64%
60%
60%

40% 32% 29%

18%
20% 8%
4% 7%
0%
FY19 FY20 FY21
Hospitality Retail and Commercial Others

Source: Company data, IDBI Capital Research

34
Chalet Hotels | Initiating Coverage

Exhibit 40: Key Milestones

Years Milestone
2000 Lakeside Chalet, Mumbai- Marriott executive apartment, Powai
2001 Renaissance Mumbai Convention centre hotel, Powai
2009 Four Points by Sheraton, Navi Mumbai
2009 The Westin Hyderabad Mindspace
2012 Inorbit Mall Whitefield Bengaluru
2013 Bengaluru Marriott Hotel, Whitefield
2014 Commercial tower, Whitefield Bengaluru
2015 JW Marriott, Mumbai Sahar
2018 The Orb and Business Centre & Office, Mumbai Sahar
2019 Listed on NSE & BSE
2020 Acquisition of Novotel Hotel, Pune
Source: Company data, IDBI Capital Research

Exhibit 41: Key Management

Name Designation
Mr. Ravi C. Raheja Promoter and Non-Executive Director
Mr. Neel C. Raheja Promoter and Non-Executive Director
Mr. Sanjay Sethi Managing Director and Chief Executive Officer
Mr. Milind Wadekar Chief Financial Officer
Mr. Rajneesh Malhotra Chief Operating Officer
Source: Company data, IDBI Capital Research

35
Chalet Hotels | Initiating Coverage

Financial Summary
Profit & Loss Account (Rs mn) Cash Flow Statement (Rs mn)

Year-end: Mar. FY20 FY21 FY22E FY23E FY24E Year-end: Mar. FY20 FY21 FY22E FY23E FY24E

Net sales 9,808 2,944 5,856 9,619 13,949 Pre-tax profit 1,071 (2,443) (1,212) 499 3,129

Growth (%) - - 98.9 64.3 45.0 Depreciation 1,035 739 1,303 1,398 1,474

Operating expenses (6,380) (2,874) (4,188) (6,076) (7,905) Tax paid (201) 63 (41) (150) (746)

EBITDA 3,429 70 1,668 3,543 6,044 Chg in working capital 684 1 456 343 258
Growth (%) 7.4 - 2,281.5 112.5 70.6
Other operating activities - - - - -
Depreciation (1,133) (1,175) (1,303) (1,398) (1,474)
Cash flow from operations (a) 2,588 (1,640) 507 2,090 4,115
EBIT 2,295 (1,105) 365 2,145 4,570
Capital expenditure (11,033) (829) (3,717) (2,722) (2,227)
Interest paid (1,462) (1,520) (1,811) (1,904) (1,750)
Chg in investments 6,812 0 (1) (1) (1)
Other income 279 223 235 258 310
Other investing activities - - - - -
Pre-tax profit 1,071 (2,443) (1,212) 499 3,129
Cash flow from investing (b) (4,221) (829) (3,718) (2,723) (2,228)
Tax (12) 1,092 305 (126) (788)
Equity raised/(repaid) - - - - -
Effective tax rate (%) 1.1 44.7 25.2 25.2 25.2
Debt raised/(repaid) 3,450 953 3,915 1,085 (1,824)
Minority Interest 30.5 0.5 - - -
Dividend (incl. tax) - - - - -
Net profit 1,089 (1,351) (907) 374 2,342
Chg in minorities - - - - -
Exceptional items (105) (82) - - -

Adjusted net profit 1,194 (1,268) (907) 374 2,342 Other financing activities (1,365) 695 12 (10) (201)

Growth (%) - - - - 526.6 Cash flow from financing (c) 2,085 1,648 3,927 1,075 (2,025)

Shares o/s (mn nos) 205 205 205 205 205 Net chg in cash (a+b+c) 452 (821) 715 443 (137)

36
Chalet Hotels | Initiating Coverage

Balance Sheet (Rs mn) Financial Ratios

Year-end: Mar. FY20 FY21 FY22E FY23E FY24E Year-end: Mar. FY20 FY21 FY22E FY23E FY24E

Net fixed assets 31,065 31,155 33,569 34,893 35,646 Adj EPS (Rs) 5.8 - - 1.8 11.4
Investments 45 45 46 48 49 Adj EPS growth (%) - - - - 526.6
Other non-curr assets 2,255 2,797 2,870 2,940 3,006 EBITDA margin (%) 35.0 2.4 28.5 36.8 43.3
Current assets 6,762 5,891 6,973 7,826 8,153 Pre-tax margin (%) 10.9 (83.0) (20.7) 5.2 22.4
Inventories 3,924 3,912 4,108 4,313 4,529 ROE (%) 8.0 (8.5) (6.6) 2.8 15.8
Sundry Debtors 417 216 271 338 423 ROCE (%) 7.5 (3.3) 1.1 5.8 12.1
Cash and Bank 1,279 458 1,173 1,616 1,479 Turnover & Leverage ratios (x)
Marketable Securities - - - - - Asset turnover (x) 0.3 0.1 0.1 0.2 0.3
Loans and advances 367 439 495 559 632 Leverage factor (x) 2.5 2.7 3.0 3.3 3.1
Total assets 40,128 39,888 43,459 45,707 46,853 Net margin (%) 12.2 (43.1) (15.5) 3.9 16.8
A Net Debt/Equity (x) 1.0 1.2 1.5 1.6 1.2
Shareholders' funds 15,546 14,161 13,254 13,628 15,969 Working Capital & Liquidity ratio
Share capital 2,050 2,050 2,050 2,050 2,050 Inventory days 146.0 485.0 256.0 163.7 118.5
Reserves & surplus 13,495 12,110 11,204 11,577 13,919 Receivable days 15.5 26.8 16.9 12.8 11.1
Total Debt 16,842 17,795 21,710 22,795 20,972 Payable days 60.8 105.2 86.7 68.7 59.1
Secured loans 16,842 17,795 21,710 22,795 20,972

Unsecured loans - - - - - Valuation

Other liabilities 954 1,286 1,087 1,196 1,193 Year-end: Mar. FY20 FY21 FY22E FY23E FY24E
Curr Liab & prov 6,788 6,650 7,412 8,092 8,723 PER (x) 35.4 - - 113.0 18.0
Current liabilities 5,823 5,664 6,314 6,888 7,428 Price / Book value (x) 2.7 3.0 3.2 3.1 2.6
Provisions 966 985 1,098 1,203 1,295 PCE (x) 18.1 - 106.5 23.8 11.1

Total liabilities 24,585 25,731 30,208 32,083 30,887 EV / Net sales (x) 5.9 20.2 10.7 6.6 4.4

Total equity & liabilities 40,128 39,888 43,459 45,707 46,853 EV / EBITDA (x) 16.9 850.4 37.6 17.9 10.2
Book Value (Rs) 76 69 65 66 78 Dividend Yield (%) - - - - -
Source: Company; IDBI Capital Research

37
Chalet Hotels | Initiating Coverage

Notes

Dealing (91-22) 6836 1111 dealing@idbicapital.com

Key to Ratings Stocks:

BUY: 15%+; HOLD: -5% to 15%; SELL: -5% and below.

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Chalet Hotels | Initiating Coverage

Analyst Disclosures
We, Archana Gude and Jyoti Amonkar, hereby certify that the views expressed in this report accurately reflect my personal views about the subject companies and / or securities. I also certify that no part of our compensation was, is or will be directly or indirectly related to the
specific recommendations or views expressed in this report. Principally, I will be responsible for the preparation of this research report and have taken reasonable care to achieve and maintain independence and objectivity in making any recommendations herein.

Other Disclosure
IDBI Capital Markets & Securities Ltd.(herein after referred to as “IDBI Capital”) was incorporated in the year 1993 under Companies Act, 1956 and is a wholly owned subsidiary of IDBI Bank Limited. IDBI Capital is one of India’s leading securities firm which offers a full suite of
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depository participant with National Securities Depository Limited (NSDL) and is also a Mutual Fund Advisor registered with Association of Mutual Funds in India (AMFI).

IDBI Capital and its associates IDBI Bank Ltd. (Holding Company), IDBI Intech Ltd. (Fellow Subsidiary), IDBI Asset Management Ltd. (Fellow Subsidiary) and IDBI Trusteeship Services Ltd. (Fellow Subsidiary).

IDBI Group is a full-serviced banking, integrated investment banking, investment management, brokerage and financing group. Details in respect of which are available on www.idbicapital.com IDBI Capital along with its associates are leading underwriter of securities and
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Except to the extent to which the report refers to the website of IDBI Capital, IDBI Capital states that it has not reviewed the linked site and takes no responsibility for the content contained in such other websites. Accessing such websites shall be at recipient's own risk. IDBI
Capital encourages the practice of giving independent opinion in research report preparation by the analyst and thus strives to minimize the conflict in preparation of research report. Accordingly, neither IDBI Capital nor Research Analysts have any material conflict of interest at
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may have financial interest in the subject company. IDBI Capital or its associates may have financial interest in the subject company. Research Analyst or his/her relatives does not have actual/beneficial ownership of 1% or more securities of the subject company at the e nd of
the month immediately preceding the date of publication of Research Report. IDBI Capital or its associates may have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research
Report. The Subject Company may have been a client during twelve months preceding the date of distribution of the research report. Price history of the daily closing price of the securities covered in this note is available at www.bseindia.com; www.nseindia.com and
www.economictimes.indiatimes.com/markets/stocks/stock-quotes.

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