This article first appeared on GuruFocus .
Release Date: November 04, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Same-store revenue grew 12.6% and RevPAR increased 14% in Q2 FY27, ahead of the long-term guidance of 9-11%.
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Occupancy improved to 78.6% from 75% a year ago, with 37% of nights sold out, enhancing pricing power.
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EBITDA flow-through was strong at 60% before GST input tax credit loss, and comparable EBITDA margin stood at 39.1%.
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Net debt reduced by Rs 35 crores to Rs 1,458 crores, with net debt/EBITDA at 3.1x and a strong credit rating of A+.
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Pipeline of 1,670 rooms, including W Hyderabad and Westin Bangalore, to drive future growth and margin expansion.
Negative Points
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GST regulation change resulted in a Rs 10 crore EBITDA impact in Q2 FY27, with no immediate resolution in sight.
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Reported PAT declined YoY due to high base from exceptional gains in Q2 FY26, despite underlying growth.
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Finance costs remain significant at Rs 38.3 crores, and rising interest rates could increase borrowing costs.
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Project approvals, such as for W Hyderabad, face potential delays due to regulatory inspections, creating timeline uncertainty.
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Rare India platform saw a reduction in hotel count from 75 to 70, indicating portfolio rationalization and slower-than-expected ramp-up.
Q & A Highlights
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Q: With H1 FY27 same-store revenue growth already near 13%, well above the 9%11% guidance, and with tailwinds from W Hyderabad, Rare India, and rebrandings coming in FY28, why keep the long-term guidance unchanged rather than raising it? A: Ashish Jakhanwala (MD & CEO) clarified that the 9%11% range applies only to same-store hotels and excludes new openings. He noted the three-year same-store CAGR has been 10.4%, and that with W Hyderabad adding roughly 6%7% on an FY28/FY29 basis on top of same-store growth, total company revenue growth should return to the high-teens or early-20s trajectory seen historically (FY12FY26 revenue CAGR of 22%). He emphasized the company is now a "cash machine," generating about Rs 320350 crores of free cash from operations this year with CapEx broadly matching, keeping net debt stable.
Q: Can you provide a bridge to the 2.5x net debt/EBITDA target, including expected CapEx and cash flows, and over what timeline? A: Ashish Jakhanwala (MD & CEO) said net debt/EBITDA currently stands at about 3.1x, with a goal to get below 3x by fiscal year-end or within a quarter. The path to 2.5x is expected to take about 18 months on a conservative basis, driven by incremental EBITDA from W Hyderabad (which currently produces no EBITDA while under development) and stable net debt funded by free cash. He also flagged optionality from recycling capital in one or two identified hotels, though timing depends on finding counterparties.
Q: On the GST Council's October 23 recommendation to allow limited input tax credit for hotels operating below the Rs 7,500 ARR threshold, what is the update on quantum and timeline? A: Rajit Nehra (CFO) said the Council suggested that businesses in the same line of business may be eligible to take credit for hotels sold below Rs 7,500, with the company's interpretation being that this should include commissions paid to OTAs. However, the final notification has not yet been issued, and industry representations are ongoing with the Group of Ministers reportedly positive on passing benefits to the industry. Ashish Jakhanwala (MD & CEO) added a note of caution, suggesting larger priorities like LTCG and STT may be addressed first.
Q: What is the outlook for RevPAR growth split between rate and occupancy in H2 FY27, given the strong MICE calendar in Bangalore, Hyderabad, and Delhi? A: Ashish Jakhanwala (MD & CEO) said the company expects to maintain the ~14% RevPAR growth seen in Q2 through Q3 and Q4, driven by about 10%11% rate growth with the balance from better capacity utilization. He noted Q4 could be stronger post-New Year vacations, with roughly 30% of March seeing a "home run," though he flagged interruptions around Diwali in November and 1520 days around Christmas/New Year. He guided to modeling same-store total revenue growth of 13%14% and RevPAR growth of 14%15% with good flow-through.
Q: What is the CapEx plan and expected yield on cost for the Sriperumbudur asset, now proposed as a separate Marriott hotel rather than a Fairfield extension? A: Ashish Jakhanwala (MD & CEO) said the 155-room hotel is already at high-20s ROCE at a rate of Rs 8,500, and the plan now adds about 134 rooms with CapEx of roughly Rs 160 crores. He expects total yield on cost of approximately 15%17%, largely because the existing hotel has already paid for the entire land cost, so there is effectively no land cost. He noted Fairfield has been one of the company's most consistent performers, including through COVID.
Q: On Rare India, Q1 had 75 hotels with ~1,050 rooms while Q2 mentions 70 hotels and 900 rooms is the reduction due to deliberate portfolio curation or owner exits? A: Ashish Jakhanwala (MD & CEO) said there are no significant changes, but the number shifts almost monthly, with a strong pipeline of about 2025 hotels waiting to join. He expects the 70 hotels to move closer to 8590 hotels in the next five to six months. The bigger focus is onboarding hotels onto the outdoor collection by Marriott Bonvoy, with the first lot going live end of December and monthly additions thereafter, which is where the fee engine kicks in.
Q: What is the update on the Navi Mumbai hotel project, including construction timelines, CapEx, and expected supply in the micro market over the next three to five years? A: Ashish Jakhanwala (MD & CEO) said the company is pleased with progress on approvals and design development, with about 658 rooms split between Westin and Fairfield. CapEx remains in line with the guided Rs 9001,000 crores, with work expected to start on ground in early FY28. He declined to reset the opening timeline, citing development uncertainties in India, but expressed confidence in the product configuration.
Q: Can you quantify the deferred tax asset recognition expected in Q4 FY27 and its impact on reported PAT? A: Rajit Nehra (CFO) said roughly Rs 100 crores of deferred tax recognition remains to be taken in the P&L, expected in Q4 FY27 per internal accounting policy after discussion with auditors. Once recognized, this will be an effective upside to the P&L for that quarter, though there will still be tax expense on a net basis. For H2, the net tax benefit after offsetting against expense will be in the range of about Rs 2530 crores.
Q: What is the outlook for Rare India's revenue and EBITDA in FY28 and FY29, and how does the economics compare to owned assets? A: Ashish Jakhanwala (MD & CEO) said the platform goes live end of this calendar year, so FY28 will be the first fully operating year for some hotels. He expects about Rs 1520 crores of top-line in the next fiscal year, with reasonably good margins given no employees, power, or other operating expenses. He noted the business can solve for a 50% ROSI, versus
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
