Multibagger stock: 200% in 2 years! Here's why ICICI Securities is betting on Chalet Hotels

Shares of Chalet Hotels have delivered over 200 per cent in the last two years. The multibagger stock is up over 40 per cent in the past six months and over 60 per cent in one year. It has also recovered over 72 per cent from its 52-week low of Rs 304.05, hit on November 18, 2022.

ICICI Securities believes that Chalet Hotels (Chalet) is well poised to benefit from the strength in demand, especially for premium and luxury hotels in India’s Tier cities. While industry peers are focusing on the asset light expansion route, Chalet has chosen to grow its hotel room and office rental portfolio over FY23-27E through the ownership route (mix of existing project expansion and long-term leases).

It believes that this is the right strategy in an industry upcycle (FY23-FY28E) and it estimates hotel EBITDA CAGR of 18 per cent over FY23-26 at EBITDA margins of 44-45 per cent.

The brokerage highlighted that the second quarter of FY24 is seasonally the weakest quarter impacted by monsoon. However, the demand outlook for the second half of FY24 looks bright owing to events such as G20, Men’s ODI World Cup, weddings, and expected return of number of in-bound international travellers to pre-Covid levels.

"The 168 keys Westin Hyderabad opened in Jun’23 and has kicked off with 100 per cent occupancy as the company has locked-in an agreement with a single client for 3 years (14 months lock-in). Further, the Occupation Certificate (OC) for 88 keys in expansion of existing Novotel, Pune is expected in the second quarter of FY24," it added.

ICICI Securities has maintained a 'Buy' rating on the multibagger stock with a target price of Rs 652, suggesting an upside potential of over 25 per cent from Monday's close of Rs 522.80.

About Chalet Hotels

Part of the K Raheja Corp group, Chalet Hotels Limited is an owner, developer, asset manager and operator of high-end hotels and a hotel led mixed-use developer in key metro cities in India such as Mumbai Metropolitan Region, Hyderabad, Bengaluru, and Pune.

The Company’s portfolio comprises nine fully operational hotels representing 2,802 keys, across mainstream and luxury segments, and commercial spaces.

Disclaimer: The stocks mentioned in the story are for information purposes only. Investors or market participants should consult their financial advisors before taking any position

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