Chalet Hotels Ltd stock is down around 3% over the past year, despite clocking 121% year-on-year revenue growth for the first half of FY26. The stock’s muted show could be because Chalet was trading at premium valuations a year ago, after rallying prior to that when the market was pricing in the upbeat hospitality cycle.
Nonetheless, the most exciting part of Chalet’s story isn’t growth, but the launch of Athiva Hotels and Resorts, a premium lifestyle brand that can transform the company from being a franchise-heavy hotel owner to a brand-led hospitality platform.
At the recently held analysts’ meeting, Chalet revealed details on its strategy, especially Athiva’s launch. For a long time now, Chalet’s portfolio has been dominated by global names like Marriott, Westin and Accor. Athiva’s launch helps Chalet potentially improve its Ebitda margin as the latter will no longer have to pay brand fees, loyalty charges and marketing contributions.
In the first phase, Athiva starts with more than 900 keys across six properties, including Khandala, Navi Mumbai, Aksa Beach and two in Goa. Within three years, Athiva plans to expand to around 1,800 keys, and a significant portion of the development cost has already been spent.
Eventually, Athiva will likely shift Chalet’s business mix substantially toward high-margin leisure assets. Once keys in development go live, Athiva could represent 20-25% of Chalet’s key base (currently 3,389), versus almost nil last year. If the early success at Khandala repeats, Athiva can lift Chalet’s overall RevPAR and Ebitda.
Meanwhile, recent capex could result in high depreciation and interest costs. This means that as new hotels start contributing to revenue, profits can grow disproportionately faster than sales. This was visible in Q2FY26 when year-on-year revenue growth was 95%, but pre-tax earnings jumped to ₹205 crore from ₹79 crore in Q2FY25, even though Ebitda margin was steady.
The real driver was pricing power as occupancy dipped to 67% in Q2FY26 versus 75% last year, as more rooms came online. Average room rates rose about 16% to ₹12,170, reflecting strong demand, improving mix and the portfolio’s premium positioning.
Hereon, investors will firstly track how quickly Athiva adds capacity across its planned 1,800 keys and whether it maintains strong room rates in that expansion. Secondly, whether core hospitality margins stay healthy needs to be seen. Thirdly, leverage trends must be tracked as the capex cycle peaks and cash flows improve.
If these three variables move in the right direction, Chalet’s current valuation at 18 times FY27 estimated EV/Ebitda, as per Bloomberg, potentially has room to grow.
