Target: ₹86
CMP: ₹61.46
We initiate coverage on Brigade Hotel Ventures (BHVL) with a Buy rating and TP of ₹86, valuing it at 14x EV/EBITDA on FY28E. BHVL has a portfolio of nine operating hotels with 1,604 keys at the end of FY26. We like BHVL considering: its strong foothold in key Southern markets; active asset management, which will drive operational efficiencies; strong parentage of Brigade Group; aggressive expansion plan in high growth markets; and lucrative valuation at current level.
We forecast net sales/EBITDA CAGR of 22.8 per cent/28.3 per cent over FY26-28E and we believe the long-term growth is more promising, given that a majority of the new assets (commanding higher ADR and operating margin) would be operational by end of FY30E.
BHVL is a subsidiary of Brigade Enterprises (BEL), which is one of the leading real estate developers in India. This allows the company to benefit from BEL’s brand reputation and leverage its network, relationships, businesses and credibility that helps it to be a trusted provider of hospitality services. With nine existing hotels, it is the second-largest owner of chain-affiliated hotels in South India and the company’s hotels are operated by global marquee hospitality companies such as Marriott, Accor and InterContinental Hotels Group.
Further, the company plans to double the inventory to 18 hotels about 3,300 keys over FY26-30E. We believe this bodes well for net sales growth as well as margin improvement over mid-long term horizon.