This article first appeared on GuruFocus .
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Consolidated Revenue:Rose 36% year-on-year to approximately ?107 crores, up from ?79 crores in the corresponding quarter last year.
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Total Revenue:Stood higher at ?115 crores.
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EBITDA:Grew 39% year-on-year to approximately ?33 crores.
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EBITDA Margin:Expanded modestly to approximately 30.7% from 30%.
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Net Profit:Declined to around ?6.4 crores versus ?10.9 crores last year.
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Portfolio Expansion:Added five hotels with 237 keys during the quarter.
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Pipeline:50-plus hotels signed, expected to open in the next 18 to 24 months.
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Release Date: August 14, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Consolidated revenue grew 36% year-on-year to ?107 crore, driven by the new Iconica hotel and strong operational momentum.
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EBITDA rose 39% year-on-year to ?33 crore, with margin expanding to 30.7% from 30%.
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Portfolio expansion continues with five new hotels (237 keys) added in Q1, and a pipeline of 50+ hotels signed for the next 18-24 months.
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Occupancy and ADR improved in owned/leased hotels, with ADR up from ?5,488 to ?6,233 year-on-year.
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Management remains confident in medium-term outlook, citing strong domestic travel demand and a disciplined capital allocation strategy to improve ROCE.
Negative Points
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Net profit declined to ?6.4 crore from ?10.9 crore year-on-year, impacted by higher financial costs, depreciation, and Ind AS effects.
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GST regulation changes led to a ?2.5 crore input credit loss in the quarter, which is a recurring cost pressure.
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Employee costs have risen to 23% of revenue due to new wage code and annual increments, with stabilization expected only in another year.
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Iconica's occupancy was hit by Q1 seasonality and flight cancellations due to the war, with April at 79%, May at 60%, and June at 70%.
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Management acknowledged that profitability has remained flattish despite revenue growth, and they are not happy with current PAT levels.
Q & A Highlights
Q: When do we move our profitability line? We've moved from 4,000-5,000 rooms to 8,000 rooms, but the PAT has remained flattish. When do we see the needle moving on the bottom line? A: CFO Amit Jaiswalexplained that the company is in a "churning stage" with an ROC of 17-18%, targeting 20% plus within a year. Executive Director Keshav Baljeeadded that the shift to revenue-share and lease models involves upfront costs and Ind AS impacts, but as more hotels come on stream, the bottom line will see higher growth. President Arjun Baljeenoted that 20% of rooms contribute 80% of revenue, and Iconica, which opened in November, needs about a year of gestation to turn the corner.
Q: What is the revenue growth, occupancy, and ADR movement for Q1 FY27? A: CFO Amit Jaiswalreported that occupancy for owned, leased, and joint venture (JL) hotels was 70%, while managed and franchisee portfolio was at 60.8%. The ADR for JL hotels increased to INR 6,233 from INR 5,488 last year, and managed hotels saw ADR rise to INR 4,300 from INR 4,031.
Q: EBITDA grew 39%, yet PAT declined. Should investors now think of EBITDA or cash profit as the better measure of underlying economics? A: CFO Amit Jaiswaladvised investors to look at non-Ind AS numbers as they show the true picture of the business. He clarified that Q1 FY27 PAT without Ind AS impact was INR 9.8 crores, compared to INR 12 crores in Q1 FY26.
Q: What has led to the decline in top line for Iconica this quarter, given Q4 occupancy was cited at roughly 60% and April-May run rate was given as 80%? A: President Arjun Baljeeexplained that Q1 is always the lowest for business hotels, and the market was hit by flight cancellations due to the war, which impacted inbound travel. CFO Amit Jaiswalprovided monthly occupancy details: April at 79%, May dropping to 60%, and June recovering to 70%.
Q: What is the break-even top line for Iconica, and what is the incremental margin above that? A: CFO Amit Jaiswalconfirmed that at an annualized top line of INR 85 crores, Iconica will break even. He added that 50-65% of anything above INR 85 crores will go down to the bottom line, and the company is targeting INR 100 crores.
Q: How much of the consolidated revenue growth came from the 237 new keys added during the quarter? A: CFO Amit Jaiswalclarified that the five new hotels (237 rooms) are all under managed and franchisee models, so the contribution to revenue is negligible since the company only earns management or franchisee fees. The major revenue growth comes from the JL (owned, leased, and joint venture) hotels.
Q: With the current pipeline, what should investors realistically think about as the sustainable revenue growth rate for the next two to three years? A: CFO Amit Jaiswalstated that the company has 7,000 odd rooms and has signed 11,000 odd rooms with 50 hotels coming up in the next 12-24 months. Most of these are under managed and franchisee models, so growth will come from management fees. He noted that giving a specific number for three years down the line is difficult, but there will definitely be growth.
Q: Can you explain the GST impact on the bottom line? A: CFO Amit Jaiswalexplained that due to a change in GST regulation, the company now charges 5% GST without input credit, whereas earlier it could set off input credit against output. This resulted in a GST input loss of INR 2.5 crores in the quarter, which had to be written off. The company has made representations to the government and is trying to find ways to mitigate this cost.
Q: Why has employee cost increased substantially over the last eight quarters in the standalone business from 19-20% levels to 23% levels? A: Executive Director Keshav Baljeeattributed the increase to the new wage code, annual increments, new leases, and strengthening of the management team. CFO Amit Jaiswaladded that revenues are scattered across quarters while wages remain fixed, so the average cost will come around 22-23% for the full year.
Q: When can Royal Orchid realistically build a INR 100-150 crore annual management fee business without taking significant balance sheet risk? A: Executive Director Keshav Baljeeclarified that Vision 2030 did not give a specific target for revenue or fees. While the company has grown fees about 14% last year and expects to be at 11,000 plus keys in the next 24 months, he noted that INR 150 crores is a very large number (2.5-3 times current), and he does not have a date for that. However, the company is looking to absolutely double this in as short a time as possible.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
