Chalet Hotels (CHALET:IN) Stock Rating Upgraded to "Buy" by ICICI Securities, Price Target Raised to INR933.00
In a recent development, ICICI Securities upgraded its stock rating for Chalet Hotels from "Add" to "Buy" status, with a revised price target of INR933.00, up from the previous target of INR917.00. This upgrade is based on a strategic valuation using the sum of the parts (SoTP) method, considering the company's future projections up to September 2026.
The positive outlook on Chalet Hotels' growth strategy, focusing on expanding its hotel and office rental portfolio through ownership, played a significant role in the upgrade. This includes plans for project expansions and securing long-term leases. The recent acquisition of a hotel in Goa also contributed to the valuation, with the company's hotel business valued at 23 times its enterprise value to EBITDA, a 7% capitalization rate for its rental assets, and the residual value of the Vivarea residential project in Bangalore.
By March 2027, Chalet Hotels aims to increase its operational hotel portfolio to 3,917 keys, with projected revenue and EBITDA growth rates of 15% and 20% respectively between 2024 and 2027. The company is expected to generate an operating cash flow of INR 8-9 billion before capital expenditures and interest in the fiscal years 2026 and 2027.
However, potential risks such as a slowdown in hotel demand and office leasing could impact Chalet Hotels' growth and financial performance. Despite these risks, ICICI Securities remains optimistic about the company's strategic growth plans and its ability to generate significant cash flow in the coming years.
In conclusion, investors should consider the recent upgrade and price target increase for Chalet Hotels as a positive sign of the company's future potential. It is essential to monitor the company's performance against its projections and keep an eye on any potential risks that may arise in the market. Stay informed and make informed investment decisions to maximize your returns in the long run.