Please find enclosed Antique’s Morning Presentation (AMP)
Initiating Coverage
Chalet Hotels - Perfect way to play recovery & disruption
We expect Chalet hotels to witness strong revenue growth ahead on the back of both cyclical and secular tailwinds. Over FY21-25e, we see the company growing at CAGR of 55%; we see hotels segment bouncing back strongly and expect by FY23/24e things would normalise and forecast revenues of Chalet hotels to be better than pre-Covid levels. Chalet hotels owns, manage and develop high end hotels in India's gateways cities with presence in key locations such as Mumbai, Bangalore, Hyderabad and Pune with good scale and high entry barriers. Chalet hotels have partnered with globally recognised hospitality brands such as JW Marriott and Accor; remain key beneficiary of positive momentum towards management contract.
We initiate at BUY with TP of INR400
We initiate Chalet hotels with a Buy rating and TP of INR400 (50:50 EV/EBITDA:DCF) implying 130% upside from the current market price. We expect Chalet revenues to grow at 55% CAGR till FY25E; while EBITDA margins to improve by 1000bps from pre-Covid levels of 32%.