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Chalet hotels reports a massive jump in the revenue:

A rise of 263% in total revenue was reported by Chalet Hotels

Chalet hotels reports a massive jump in the revenue:

Chalet Hotels posted a net profit of Rs.28.55 Cr. in June 2022, compared to a loss of Rs.41.66 Cr. YOY. The company clocked up net revenue of Rs.253 Cr., up by 263% versus Rs.69.52 Cr. in June 2021 due to robust growth and higher rental incomes. The operating profit stood at Rs.102 Cr., which was up by 11% from March 2022. The Occupancy rate (OCC %) stood at 78% for the June quarter, compared to occupancy of 60% in March 2022. The Average Daily rate (ADR) was at Rs.7457 for the June quarter, higher by 37% from the preceding quarter. The domestic business travel increased by 100%, increasing profit

 

Cost reductions to increase efficiency:

The firm decreased its staff to room ratio to 0.84 from 1.18 in Q1 FY21. The division’s revenue was 5% higher from Q1 FY20 than in the pre-pandemic year. This was due to a strong recovery in business travel in the current quarter. The Revenue per room available (RevPAR) stood at Rs. 5,816/-in Q1 FY23 compared to 2,973/-in Q4 FY22 and Rs.1,252/-in Q1 FY22. EBITDA margins for the quarter were at 42%. The company reversed 16.6 million of its provisions. Hospitality sector revenue was up by 5% from June 2021 and 2.5% from the March 2022 quarter. Fixed costs were at 48% for the June quarter and reduced by 33%. Variable costs were reduced by 42% to increase operating leverage. The total number of rooms for June 2022 was 2,554 rooms.

The average payroll cost was 13%, down from 15% in the previous quarter. Renewable energy sources accounted for approximately 61% of total energy costs. The hotel intends to open a new hotel in Mumbai, which will be operational within a couple of months. They will also be upgrading the Bangalore hotel, which will be operational by December. Chalet Hotels were awarded a contract by DIAL, a good opportunity to debut in the northern Indian markets. They intend to have their 9th property with 350 to 400 rooms in the five-star deluxe space. A majority of the inventory came from metropolitan cities. It will give them entry to a major market in India.

The management is optimistic about its future opportunities and has witnessed a strong recovery trend. There is a potential area for innovation and change in the hospitality sector. Given the ongoing supply chain disruption and the surge in crude oil prices, we believe investors should wait for Q2 FY23 results before taking any further action.

Valuations:

The 5yrs P/E ratio is at -21.6 times and the stock P/E 33.34 times. The P/B ratio is at 4.86 times for Q1 FY23. The ROCE for Chalet hotel is at -0.12% with a Debt to equity ratio of 1.94% indicating that the company is borrowing more from the market to fund its operations. The ROE for the scrip was -5.35% .The share prices closed at Rs. 318 on Friday, down by 3.05%. It touched a 52-week high of Rs. 345 and a 52-week low of Rs. 159. The market cap for the company is at Rs. 6,507 cr.

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