Building lobbies to legacy: Doubling keys to unlock growth
We initiate coverage of Brigade Hotel Ventures Ltd. (BHVL) with a BUY rating and a target price of INR117, based on 18x Sep’27E EV/EBITDA for operational hotels and 1x capital WIP for assets opening beyond FY28E adjusted for incremental debt. BHVL, a subsidiary of the listed Brigade Enterprises Ltd. (BRGD), is an owner and developer of hotels in key cities in India, primarily across south India. As of Jun’25, BHVL’s portfolio boasts of nine operating hotels across Bengaluru (Karnataka), Chennai (Tamil Nadu), Kochi (Kerala), Mysuru (Karnataka) and the GIFT City (Gujarat) with 1,604 keys. As part of its expansion plans, the company intends to develop nine new hotels with 1,700 keys across south India with an estimated capex of ~INR 34bn over FY25–29 (assuming capex of ~INR 20mn/key).
An assorted platter – operated by marquee hospitality labels
While BHVL is an asset owner, its hotels are operated by global marquee hospitality companies such as Marriott, Accor and InterContinental Hotels Group. Notably, BHVL, via these labels, caters to the upper upscale, upscale, upper-midscale and midscale segments. The hotels provide a comprehensive customer experience, including fine dining and specialty restaurants, venues for meetings, incentives, conferences, and exhibitions (‘MICE’), lounges, swimming pools, outdoor spaces, spas, and gymnasiums.
Master ‘key’ move – aims to double operational keys by FY30
As of Jun’25, BHVL has a portfolio of nine operating hotels across Bengaluru (Karnataka), Chennai (Tamil Nadu), Kochi (Kerala), Mysuru (Karnataka) and the GIFT City (Gujarat) with 1,604 keys. As part of its expansion plans, the company intends to develop nine new hotels with 1,700 keys across south India with an estimated capex of ~INR34bn over FY25–29 (assuming capex of ~INR 20mn/key). In addition to the current operational + pipeline of hotels as of Jun’25 – which would take total operational keys to ~3,300 by FY29E, BHVL continues to look for strategic expansion opportunities.
Key risks: Slowdown in hotel occupancies/ARRs and delay in execution of upcoming hotel assets.
Strong parentage of the Brigade Group
The company is a subsidiary of Brigade Enterprises Ltd. (BRGD), which is a real estate developer in India. BRGD is a multi-asset class real estate developer with projects across real estate, leasing and hospitality businesses. With extensive experience in real estate and commercial projects, BGRD has a deep understanding of market trends and location opportunities, which enables the company to locate strategic land parcels for its hotels.
Further, BRGD’s involvement in developing large mixed-use developmental projects provides it with an opportunity to develop hotels as part of these projects, which allows the company to provide an integrated experience to its customers by combining hospitality with other amenities and services.
Also, the company leverages BRGD’s expertise and knowledge to develop hotels with cost efficiency and high quality in shortened timelines. In addition, the company benefits from the strong reputation of BRGD, its network and relationships to secure corporate clientele for hospitality tie-ups and share services such as human resource, accounting and legal to drive operational efficiencies.
17% revenue and 20% EBITDA CAGR over FY25–28E
We build in same-store RevPAR growth of ~8% for operational hotels over FY25–28E, in line with our view on the hotels industry; the balance revenue contribution of 9-10% stemming from new hotels and increased F&B revenue over the medium term, which was ~33% of overall hotel revenue in FY25. We estimate 20% EBITDA CAGR over the same period with EBITDA margins expanding 260bps to 37.7% in FY28 vs. 35.1% in FY25 on account of operating leverage. Beyond FY28E, margins may expand further as the Hyderabad and Chennai luxury/premium hotels begin to meaningfully contribute to revenue and EBITDA at higher margins upon stabilisation.
Valuation: Initiate with BUY; TP INR 117
We initiate coverage with a BUY rating on BHVL with a target price of INR 117. We value the company’s operational hotels as of Sep’27E at an EV of INR 43.5bn at 18x Sep’27E EV/EBITDA of INR 2.4bn (adjusted for 50% Chennai hotel share) – at a 20% discount to our target multiple of 23x for peers such as Lemon Tree Hotels and Chalet Hotels, considering company’s operational portfolio leans more towards upper upscale hotels. As the company’s premium/luxury hotels begin operations from FY28E, the EBITDA multiple may expand over time. For the company’s hotels set to open beyond FY28E, we add 1x capital WIP of INR 15.1bn and reduce Sep’27E net debt of INR 14.1bn factoring in the capex required for these hotels. Hence, we arrive at a target equity value of INR 44.5bn or INR 117/share.
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