Summary
Brigade Hotel Ventures Limited - Q3 FY 2026 Earnings Call Summary Thursday, January 29, 2026, 2:00 PM
Event Participants
Executives 7 Amar Mysore, Ananda Natarajan, Arindam Mukherjee, Manoj Agarwal, Nirupa Shankar, Rayan Aranha, Vineet Verma
Analysts 6 Adhidev Chattopadhyay, Arun Agarwal, Kartikey Goyal, Nishant Mundhra, Prashant (Individual), Pulkit Chawla, Sourabh Gilda
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income | ₹143 crores | +14% YoY; driven by strong corporate demand and a 17% rise in RevPAR. |
| EBITDA | ₹51 crores | +17% YoY; 35.9% margin; impacted by 1.6% (₹2.3 cr) due to GST 2.0 input tax reversal. |
| PAT | ₹22 crores | +126% YoY; improvement driven by lower interest costs following IPO debt repayment. |
| ARR | ₹7,852 | +17% YoY; management targeting levels above ₹7,500 across more hotels to mitigate GST impact. |
| Occupancy | 76.1% | Stable YoY; Bangalore micro-markets reaching 80%+ during peak weekdays. |
| RevPAR | ₹5,973 | +17% YoY; portfolio growth led by Bangalore and GIFT City markets. |
| Net Cash | ₹132 crores | Positive cash position post-IPO; current debt is limited to a ₹148 crore promoter loan. |
| Adjusted ROCE | 13.1% | Reflects 9M FY26 performance; Return on Operating Capital stands higher at 18.8%. |
Geographic & Segment Commentary
- Bangalore Portfolio: RevPAR grew 19% YoY with 76% occupancy; supply growth in the region (7.3%) continues to lag demand (10.1%), allowing for pricing power. Limited near-term supply in specific micro-markets like OMR and Racecourse is driving occupancy toward 80%+.
- GIFT City (Grand Mercure): Recorded 21% ARR growth and 24% RevPAR growth YoY; management remains bullish on the Gujarat market with a new F&B outlet launching this quarter.
- Mysuru Portfolio: Maintained high occupancy with the new ibis Styles Mysuru reaching 71.7% occupancy within its first year of operations.
- Chennai & Hyderabad: Portfolio expansion is focused here with the 45-key Courtyard by Marriott Chennai (FY27) and the Intercontinental Hyderabad (integrated with WTC) currently under construction.
Company-Specific & Strategic Commentary
- Portfolio Expansion: Plan to double inventory by adding 1,700 keys (reaching 3,300 total) by FY30 via 9 new hotels and an investment of ₹3,600 crores.
- Sustainability: Renewable energy adoption reached 66% across the portfolio, with certain properties exceeding 90% usage, helping maintain utility costs at 5% of revenue.
- F&B Strategy: Focused on high-teens growth (16% in 9M FY26); shifting toward dynamic pricing for corporate MICE contracts rather than fixed static rates.
- Land Acquisition Strategy: All 9 pipeline hotels have land secured via 55-60 year long-term leases or direct ownership, keeping land cost at only 10% of total capex.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue/RevPAR Growth | Mid-to-high teens (15-18%) | Based on demand-supply arbitrage in South India and lack of new supply in key micro-markets. |
| Capex | ~₹500 crores for FY27 | Part of the ₹3,600 crore 5-year plan; spend will be back-ended in FY29 and FY30. |
| Net Debt/EBITDA | 4.0x to 4.5x (Peak) | Management expects leverage to peak in FY29-30 during the height of the construction cycle. |
| DSCR | 4.0x through FY29 | Strong operational cash flows expected to cover debt obligations comfortably during expansion. |
Risks & Constraints
| Risk | Context |
|---|---|
| Regulatory/Taxation | GST 2.0 rules force ITC reversals for room rents below ₹7,500, currently impacting margins by 160 bps; 7 of 9 hotels currently sit in this bracket. |
| Execution Delay | The Grand Hyatt Chennai project is currently awaiting CRZ (Coastal Regulation Zone) environmental clearance before construction can commence. |
| Brand Renewal | A key Marriott contract expires in Dec 2026; management is currently negotiating between renewal or “up-branding” the property. |
Q&A Highlights
Revenue Drivers (Manoj Agarwal/Nirupa Shankar)
- Question: What gives confidence in mid-teens RevPAR growth vs industry single digits? (Pulkit Chawla)
- Answer: Strategic positioning in micro-markets with zero new supply and high corporate demand. RevPAR is also being boosted by shifting corporate contracts from static to dynamic rates.
GST Margin Impact (Ananda Natarajan)
- Question: How long will the 1.6% margin hit persist? (Adhidev Chattopadhyay)
- Answer: It applies to any individual bill below ₹7,500. As ADRs trend toward ₹7,800-₹8,000, this impact will naturally diminish.
Leverage and Funding (Nirupa Shankar)
- Question: Will you raise incremental debt for the ₹3,600 cr capex? (Vaibhav Muley)
- Answer: Yes, fresh debt will be taken starting FY27. While Debt/EBITDA will rise to 4x, the DSCR remains very healthy at 4x coverage.
Operational Metrics (Manoj Agarwal)
- Question: How is the MICE and Wedding business trending? (Prashant)
- Answer: Banquet-heavy hotels like Sheraton see 25-30% of business from MICE. Current banquet occupancy is only 40-50%, leaving significant room for F&B margin expansion.
Key Takeaway
Brigade Hotel Ventures delivered a robust Q3 FY26 with a 14% increase in total income and a 126% surge in PAT, underpinned by a 17% growth in RevPAR. The company successfully utilized IPO proceeds to clear existing debt, resulting in a net cash position of ₹132 crores. Strategically, the firm is embarking on an ambitious ₹3,600 crore expansion to double its capacity to 3,300 keys by FY30, focusing on high-growth business hubs like Bangalore, Chennai, and Hyderabad. While GST 2.0 regulations created a 160 bps drag on EBITDA margins due to ITC reversals, management expects this to normalize as ADRs across the portfolio climb above the ₹7,500 threshold. With a 9-hotel pipeline and land costs secured at efficient levels, the company is well-positioned to capitalize on the favorable demand-supply gap in South Indian hospitality markets through FY30.
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