Kamat Hotels FY26: Revenue up, margins under pressure, expansion stays asset-light

Kamat Hotels (India) Limited closed Q4 FY26 with a strong finish on profitability, even as FY26 as a whole reflected clear cost pressure. On a consolidated basis, Q4 FY26 operational income rose to INR 110.1 crore, up 19.2 percent year on year. EBITDA for the quarter increased 28.6 percent to INR 31.9 crore, with EBITDA margin expanding by 213 basis points to 28.97 percent. Profit after tax grew 59.1 percent to INR 17.5 crore and PAT margin improved to 15.89 percent.

The full-year picture was more cautious. FY26 revenue grew 8.0 percent to INR 385.6 crore, but EBITDA fell 7.5 percent to INR 96.8 crore and EBITDA margin declined to 25.10 percent from 29.33 percent in FY25. FY26 PAT declined 17.2 percent to INR 38.6 crore, with PAT margin at 10.01 percent.

The operating story: demand held up, costs moved faster

In the investor presentation, the company noted that FY26 occupancy improved to 57 percent from 54 percent in FY25, supported by domestic leisure travel, weddings and MICE demand. Group ARR was stated at INR 6,051, described as largely flat year on year due to rising room supply in key markets.

However, management highlighted cost pressures in the quarter. The presentation called out escalating Middle East tensions that lifted fuel, commercial LPG and logistics costs, creating operational pressure across hotel and F and B operations. In the concall, the management also spoke about rising labour costs, including an impact from the new wage code and salary revisions.

Consolidated financial summary

Portfolio metrics: steady brands, one weak spot

The company’s portfolio is built around The Orchid brand, IRA by Orchid, and leisure and heritage assets such as Fort JadhavGadh and Mahodadhi Palace, alongside Lotus Resorts. The presentation’s brand-level operating tables show mixed movement in FY26.

In FY26, ARR for Orchid was INR 6,393 versus INR 6,228 in FY25, while IRA ARR was INR 5,292 versus INR 5,400. Lotus ARR improved to INR 5,912 from INR 5,721. Fort JadhavGADH ARR was INR 8,920 versus INR 8,817.

Occupancy moved differently across brands. Orchid occupancy is shown at 54 percent in FY26 compared to 62 percent in FY25, and IRA at 69 percent versus 72 percent. Lotus occupancy was 58 percent versus 61 percent. Fort JadhavGADH stood out with 29 percent occupancy in FY26 versus 36 percent in FY25.

In the concall, management acknowledged the Fort JadhavGADH underperformance and linked it to leadership and strategy changes. It also stated that the property is profitable and expects improved results with revised selling strategy and broader tie-ups with wedding vendors.

Revenue mix and the IRA Mumbai discontinuation

The investor presentation provides two relevant mix disclosures for FY26: room revenue at 60 percent and F and B at 40 percent. It also provides a hotel wise revenue mix chart with Orchid at 64 percent, Lotus Resorts at 5.4 percent, and ICRA at 26 percent, with a heritage category shown but not labelled with a percentage.

A significant structural change for FY27 is the discontinuation of IRA by Orchid Hotels, Mumbai. The presentation states that operations were discontinued effective April 1, 2026 following the expiry of the leave and license agreement.

In the concall, management quantified the impact: IRA Mumbai contributed about INR 50 crore revenue in FY26. It also indicated IRA Mumbai delivered roughly INR 20 crore EBITDA, but suggested the exit could be slightly EBITDA positive due to lower administrative overhead. Management explicitly stated FY27 could see reported revenue degrowth due to the removal of this property, though it expects other hotels and openings to fill the gap.

Expansion pipeline: growth remains asset-light

Kamat Hotels continues to position growth around leases, revenue share and management contracts, aiming to preserve capital. The roadmap slide describes an asset-light model and also cites a target of over 30 percent EBITDA margins under that approach.

The FY27 pipeline is stated at about 600 keys and the upcoming properties table lays out specific projects:

• Bhavnagar, IRA by Orchid, 61 rooms, leased, expected June 2026
• Gwalior, Orchid, 50 rooms, leased, expected September 2026
• Dehradun, Orchid, 96 rooms, leased, expected September 2026
• Nashik, Orchid, 57 rooms, managed, expected December 2026
• Rishikesh, Orchid, 44 rooms, revenue sharing, expected March 2027
• Mandavi Kutch, Orchid, 155 rooms, managed, expected December 2027
• Puri, Orchid, 156 rooms, leased, expected December 2029

In the concall, management also pointed to delays in certain projects and cited material and supply challenges, including constraints linked to LPG usage in manufacturing, which can disrupt timelines for renovations and build-outs.

Balance sheet and cash discipline

The presentation highlights meaningful improvement in leverage. Consolidated debt reduced from INR 327.3 crore in FY23 to INR 110.8 crore in FY26. Net worth rose to INR 332.6 crore in FY26 from INR 154.1 crore in FY23. Cash flow from operations increased to INR 97.7 crore in FY26 compared to INR 66.3 crore in FY25.

In the concall, management discussed liquidity comfort and noted it prefers keeping cash for contingencies, while also stating in the presentation outlook that it would like to maintain a net cash phenomenon.

What to track from here

Kamat Hotels ends FY26 with steady revenue growth, improving quarterly profitability momentum, and a stronger balance sheet than prior years. The pressure point is margin compression at the full-year level, driven by labour and input-cost inflation and the ramp-up dynamics of newly opened hotels.

FY27 execution will likely revolve around two moving parts that management itself highlighted: first, ramp-up of recently opened hotels as they stabilise, and second, the pace and timing of the pipeline openings under an asset-light model. Alongside these, the loss of IRA Mumbai creates a reported revenue headwind that will need to be offset by improved performance across the remaining portfolio and incremental keys.