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On Thursday, Jefferies initiated coverage on Chalet Hotels (CHALET:IN), part of the K Raheja Corp group, with a Buy rating and a price target of INR 945.00. The firm highlighted Chalet Hotels’ strong position in the luxury and premium hotel segment as well as its mixed-use properties across India.
Chalet Hotels owns a portfolio of approximately 3,200 keys, encompassing 11 hotels, which is expected to grow at a compound annual growth rate (CAGR) of about 7% over the next five years. Jefferies pointed out that the company is strategically placed to benefit from the Meetings, Incentives, Conferences, and Exhibitions (MICE) sector, particularly with its significant presence in the Mumbai Metropolitan Region (MMR), which accounts for around 50% of its inventory, and in other metropolitan cities, which represent over 80% of its inventory.
The company has recently expanded beyond the MMR and diversified its operations beyond hotels through its rentals business. It has also partnered with multiple brands such as Taj and Hyatt, a move aimed at diversifying its brand mix. Jefferies noted these recent developments are likely to be incrementally beneficial for Chalet Hotels.
However, the firm also mentioned that while the diversification outside of the MMR is positive, it could potentially impact the company’s margin growth. Despite this, Jefferies has given a vote of confidence in Chalet Hotels’ future prospects by initiating coverage with a Buy rating.
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