Summary
Kamat Hotels (India) Limited - Q3 FY26 Earnings Call Summary Wednesday, February 04, 2026 04:00 P.M.
Event Participants
Executives 2 Smita Nanda (CFO), Vishal Vithal Kamat (Executive Director)
Analysts 4 Aditya Verma (Synergy Investments), Guneet Singh (Counter Cyclical PMS), Neeraj Mansingka (White Pine Investment Management), Runit Kapoor (Investaya Investments), Viraj Shah (Tatvic Digital Analytics)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Consolidated) | ₹118 crores | +12% YoY; Driven by strong recovery in November and buoyancy in city hotels despite leisure headwinds. |
| EBITDA | ₹39 crores | +7.2% YoY (approx); Margin stood at 33.14% for the quarter. |
| Profit After Tax (PAT) | ₹19 crores | -26.9% YoY; Impacted by higher pre-opening expenses and last year’s high base due to the Mahakumbh event. |
| PAT Margin | 16.23% | -877 bps YoY; Compression due to operational volatility in leisure segments and new hotel gestation costs. |
| Net Debt | ~₹50-68 crores | Management noted they are approaching the target of ₹50 crores net debt due to strong cash reserves. |
| Occupancy (Orchid Mumbai) | 80% | +600 bps YoY; Improved occupancy from 74% in the corresponding previous quarter. |
| ARR (Orchid Mumbai) | ₹7,818 | +9.1% YoY; Growth achieved despite increased room supply in the Andheri/Vile Parle micro-market. |
| ARR (Ira Mumbai) | ₹6,825 | +12.8% YoY; Stronger performance compared to ₹6,050 in the previous year. |
Geographic & Segment Commentary
- Mumbai (City): Performance remains resilient with Orchid Mumbai reaching 80% occupancy. Management notes that while 2,500 new rooms have entered the micro-market, ADRs are plateauing rather than falling, supported by MICE demand from Jio Convention Center and NESCO.
- Pune: Orchid Pune is undergoing phased renovation. The first phase completion led to an ARR jump from ~₹5,600 to ~₹6,500 within 20 days; the hotel will operate with a full 410-room inventory once complete.
- Leisure (Shimla/Manali): Significant underperformance for the second consecutive year due to road washouts and infrastructure damage. These locations saw dried-up demand from May through the peak season due to connectivity issues.
- Goa: The Orchid Passaros (formerly Lotus) has shifted to an “Adults Only” (15+ years) strategy to cater to mature/foreign audiences. This transition initially lowered occupancy but improved ARRs from ₹3,000 to over ₹6,600 in December.
Company-Specific & Strategic Commentary
- Semi-Asset Light Strategy: Focus remains on management and revenue-share contracts. Management noted that new openings (Rishikesh, Panchgani, Hyderabad) are currently in the gestation phase, weighing on EBITDA.
- Pre-opening Expense Policy: The company expenses all pre-opening costs (₹20-75 lakhs per hotel) directly through the P&L rather than capitalizing them. This ensures operational pressure on GMs from day one but impacts short-term margins.
- Digital Marketing & Direct Sales: Reduced reliance on OTAs (which charge ~20% commission) by strengthening the in-house sales team and digital marketing spend for new destinations.
- Brand Repositioning: Converting legacy “Lotus” properties into the “Orchid” brand to drive higher ARRs, as seen in the Goa transition.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| New Room Keys | ~280-290 rooms (CY 2026) | Delayed openings in Dehradun, Gwalior, Bhavnagar, and Nashik are expected to come online in the coming annual year. |
| Revenue (FY26) | ~₹370-380 crores | Management lowered the previous ₹400 crore guidance by 5-7% due to project delays and leisure disruptions. |
| Future Key Target | 2,500 Keys (H1 FY27) | Original FY26 target for 2,500 keys deferred by ~6 months due to owner-side construction delays. |
| New Capacity | 25 Rooms (April 2026) | Additional wing at Noida; owner faces penalties if not delivered on time. |
Risks & Constraints
| Risk | Context |
|---|---|
| Project Delays | Significant reliance on third-party owners for construction. Delays in Dehradun, Gwalior, and Bhavnagar have deferred revenue while maintaining “drag” from pre-hired staff costs. |
| Infrastructure/Macro | Continued vulnerability of Himachal properties to road/weather conditions. Aviation disruptions and regional issues (Operation Sindoor) previously impacted leisure segments. |
| Supply Pressure | Over 2,000-2,500 new rooms in the Mumbai airport vicinity may limit the ability to aggressively hike room rates (plateauing ADRs). |
Q&A Highlights
Performance Discrepancy
- Question: why has revenue only grown 12% despite a 30% increase in keys? (Guneet Singh)
- Answer: High base effect from last year’s Mahakumbh in Ayodhya (ARRs were ₹12k-15k). Current new hotels are in the 6-9 month gestation period where they often report initial EBITDA losses due to expensed pre-opening costs. (Vishal Vithal Kamat)
Pune Lease Dispute
- Question: What is the status of the ₹21 crore provision for the Pune lease dispute? (Runit Kapoor)
- Answer: It is a technical matter involving government delays in providing certain deliverables. The ₹21 crore is a maximum “worst-case” provision; management expects a resolution soon that won’t jeopardize operations. (Vishal Vithal Kamat)
Goa Strategy
- Question: Why is occupancy low at the Goa Lotus/Orchid property? (Aditya Verma)
- Answer: The property was rebranded to Orchid and transitioned to “Adults Only.” This excludes families but attracts 80% foreign guests and has doubled ARRs from ₹3,000 to ₹6,600. (Vishal Vithal Kamat)
Expansion & M&A
- Question: Are you looking at brand partnerships or acquisitions given recent industry consolidation? (Runit Kapoor)
- Answer: No current partnerships on the horizon. The company is open to inorganic growth if an opportunity to “consolidate someone else” arises. (Vishal Vithal Kamat)
Key Takeaway
Kamat Hotels reported a steady Q3 FY26 with 12% revenue growth, though PAT declined YoY due to the absence of the previous year’s Mahakumbh windfall and higher gestation costs for new properties. The company is aggressively pursuing a semi-asset light model, having opened five hotels recently (including Hyderabad and Rishikesh), though construction delays at owner-sites in Gwalior and Dehradun have pushed the 2,500-key target into H1 FY27. Strategic highlights include the successful ARR uplift in Pune and Goa through renovation and niche positioning, and a significant reduction in net debt to near ₹50-68 crores. While Mumbai ADRs show signs of plateauing due to new supply, management remains optimistic about volume growth from MICE activity. The company expects to end FY26 slightly below initial revenue guidance but anticipates improved EBITDA in FY27 as new hotels mature and pre-opening expenses subside.
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