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• Title: Chalet Hotels Q1 FY27: Core growth holds up as CRE cash flows strengthen */

Chalet Hotels Q1 FY27: Core growth holds up as CRE cash flows strengthen

Chalet Hotels reported a quarter where the consolidated year on year comparison looks misleading at first glance. Consolidated total income for Q1 FY27 came in at INR 5,213 million, down 42.6% year on year, and consolidated EBITDA was INR 2,431 million, down 34.5%. The steep decline was primarily because Q1 FY26 had a large one-time residential revenue recognition at the Koramangala project.

Once that noise is removed, the operating picture is clearer. Consolidated performance excluding the residential project delivered total income of INR 5,140 million, up 9.5% year on year, and EBITDA of INR 2,400 million, up 15.2%. EBITDA margin expanded by 231 basis points to 46.7%. Profit after tax for Q1 FY27 stood at INR 861 million.

Hospitality: Rate-led growth despite inbound headwinds

The hospitality segment delivered steady growth despite a mixed demand environment. Management highlighted that international business excluding crew stayed flat year on year due to the West Asia conflict, while domestic and leisure demand remained resilient. Portfolio RevPAR increased 6.5% year on year, driven by ADR growth of 8.5%, even as occupancy fell by 1.2 percentage points.

Segment performance showed a notable divergence. Business hotels posted moderate RevPAR growth, while resorts were the standout, with 19% year on year growth in RevPAR supported by both ADR and occupancy improvement. Management called out strong traction at the Westin Himalayas and ongoing ramp-up at Athiva Resort and Spa, Khandala, supported by marketing themes such as Vivaah by Athiva.

A recurring investor concern through the call was the underperformance in the Mumbai Metropolitan Region. Management attributed this to self-driven disruptions: construction activity at the Powai complex impacting guest experience and renovation at the Navi Mumbai property (Four Points by Sheraton Navi Mumbai). Management indicated the Vashi product is now ready, with a rebranding announcement expected in the coming weeks, and suggested Powai access and connectivity works should improve by the end of the quarter.

Commercial real estate: High-margin cash flows scale up

Commercial real estate continued to provide stable, high-margin earnings. Q1 FY27 revenue from the segment rose 18.2% year on year to INR 865 million, while EBITDA grew 20.9% to INR 735 million. EBITDA margin improved to 85%.

Occupancy improved to 91% as of June 2026 versus 77% in June 2025, supported by leasing momentum including an LOI signed for 66,000 square feet at CIGNUS Whitefield. Management noted a monthly rental exit run rate of around INR 290 million in June 2026 and guided that monthly rentals could scale to INR 300 to 320 million during FY27. The company also reiterated that commissioning of CIGNUS Powai Tower II is expected to create a step-change in growth from FY28 onwards.

Residential: Lumpy revenue recognition continues

The residential project at Koramangala continued to be the key driver of consolidated volatility. Q1 FY27 saw handover of one unit with revenue recognition of INR 73 million and EBITDA of INR 31 million. In comparison, Q1 FY26 had 95 units handed over, resulting in revenue of INR 4,391 million and EBITDA of INR 1,628 million.

The company stated that Phase 1 is now complete, and Phase 2 consists of 168 units pending handover, expected during the course of FY27. In addition, a commercial component of around 160,000 square feet is under development and targeted to be leased by FY28.

Financial summary (Q1 FY27)

Pipeline and capital allocation: Heavy execution phase underway

Chalet Hotels continues to invest through a sizeable development pipeline across hospitality and commercial real estate. Under-construction projects include CIGNUS Powai Tower II (0.9 million sq ft) and multiple hotels: Taj Delhi International Airport (~380 rooms), Athiva Resort and Spa Varca (205 rooms), Ritz Carlton Hyderabad (330 rooms), and Hyatt Regency Airoli (276 rooms). Management stated that Hyatt Regency Airoli and Ritz Carlton Hyderabad are to be received on a warm-shell lease basis being developed by Mindspace REIT.

Management indicated that at the Taj Delhi International Airport project, a minimum of 70 rooms are expected to be launched in Q4 FY27, with the remaining inventory to be launched in a phased manner within Q1 FY28. CIGNUS Powai Tower II remains targeted for FY27-end substantial completion, with the investor presentation referencing Q4 FY27.

On capital allocation, the CFO stated planned capex of approximately INR 30 billion over FY27 to FY29 across hospitality and commercial real estate, expected to be largely funded through internal accruals. Net debt stood at INR 20,405 million as of June 2026, with INR 10,914 million allocable to assets under construction or yet to be operationalized. Liquidity was stated to be around INR 4 billion, and the average cost of finance declined marginally to 7.4%.

What changed this quarter

The key operating improvement in Q1 FY27 was margin expansion in the core business. Ex-residential EBITDA margin improved to 46.7%, with management attributing it to strong asset performance and efficiency measures. The hospitality margin improvement was also linked to better ramp-up and stabilization at resort assets.

At the same time, the quarter highlighted two persistent swing factors that investors will likely track through FY27. First is inbound travel demand, which remains influenced by the West Asia geopolitical situation. Second is performance recovery in MMR, where Powai construction and Navi Mumbai renovation have impacted occupancies.

Takeaways

Chalet Hotels ended Q1 FY27 with a clean message. Core operations grew at a double-digit pace on EBITDA, commercial real estate continued to scale with very high margins, and the development pipeline remains active with clear milestone disclosures. The consolidated year on year decline was largely an accounting effect from residential handovers in the base quarter.

The next few quarters should offer clearer operating comparability as residential handovers normalize and as MMR disruptions ease. Execution on key projects, especially CIGNUS Powai Tower II and the Delhi airport hotel, will likely remain central to how investors assess the company’s medium-term earnings trajectory.