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Hidden Gem - Chalet Hotels (Target Price 1055)

ICICIdirect Research 27 Feb 2026 DISCLAIMER

Chalet Hotels to develop ~330 room “Ritz Carlton” in Madhapur, Hyderabad; Will complement its 2 existing hotels in the area.
Chalet Hotels announced development of ~330-room hotel in Mindspace Madhapur, Hyderabad. Mindspace Madhapur is Hyderabad’s largest A-grade integrated business campus with ~13mn sqft of commercial space.
The hotel will be branded under “Ritz Carlton” and will have 330 rooms and ~36,255 sqft of commercial luxury retail space. Overall, Hyderabad has ~120mn sqft of commercial space out of which Madhapur has largest commercial space of ~73.1mn sqft.
Chalet Hotels will avail warm shell lease of the building from Mindspace REIT and will invest in the fit outs and interiors. The total capex for the project will be ~Rs.630cr; Construction cost of ~Rs.560cr (~Rs.1.7cr per room), Refundable Security Deposit of ~Rs.30cr, Interest during construction (IDC) & other expense of ~Rs.40cr.
Mindspace REIT will be handing over the warm shell by Q4FY28 and Chalet expects the hotel to be operational by Q4FY29.
Hyderabad and Bengaluru, key business locations have reported double-digit ADR growth over the past 2-3 quarters driven by increased MICE and corporate activity. Further, as per our conversation with the company,  the strong growth momentum has sustained into Q4FY26.
Chalet Hotels is adding 5 hotels to its portfolio with ~1180 rooms out of which 2 hotels (580 rooms) are under construction. 3 hotels with 600 rooms are awaiting regulatory approvals post which construction is expected to begin.
View: The proposed hotel will strengthen Chalet’s presence in Hyderabad’s key IT hub. The hotel will be located near The Westin Hyderabad, HITEC City, which currently operates at 100% occupancy under a corporate contract, creating a favourable operating environment. We believe with strong GCC and corporate presence, the upcoming hotel can also get into similar deal and operate at optimum occupancy levels. The Ritz Carlton brand has average rate premium of 20-25% compared to Westin brand. Hence, higher occupancy and ADR will lead to strong RevPAR thereby contributing meaningfully to overall revenues ahead.
We have Buy rating on Chalet Hotels with SoTP based price target of Rs.1055

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