CHALET - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.1

🏨 Fundamental Analysis

Chalet Hotels operates in a cyclical and capital-intensive industry, and while recent earnings momentum is strong, the valuation is extremely stretched. Here's the breakdown

Metric Value Implication

Market Cap ₹19,672 Cr Mid-to-large cap; decent scale in hospitality

Stock P/E 139 Extremely overvalued vs. industry PE of 37.4

PEG Ratio 2.47 Overvalued relative to growth; caution advised

ROCE / ROE 11.1% / 5.77% Below average; weak capital efficiency

Dividend Yield 0.00% No dividends; not suitable for income investors

Debt-to-Equity 0.85 High but manageable for hotel industry

EPS ₹6.53 Weak earnings base relative to price

Qtr Profit Var +50.2% Strong earnings momentum; positive signal

FII/DII Holding Change +0.06% / -0.01% Flat institutional sentiment

📉 Technical Analysis

Current Price: ₹900

DMA 50 / DMA 200: ₹894 / ₹854 → Trading above both; mildly bullish

RSI: 48.7 → Neutral zone; no strong momentum

MACD: +6.17 → Bullish crossover; short-term strength

Volume: Below average; weak conviction

💰 Valuation & Entry Zone

Despite strong recent profit growth, the P/E of 139 and PEG of 2.47 make Chalet overvalued for long-term investors.

Ideal Entry Zone: ₹750–₹800

This range offers a better margin of safety and aligns with prior support levels

Avoid fresh entry above ₹900 unless earnings growth sustains for multiple quarters.

📈 Long-Term Investment Outlook

Pros

Strong recent profit growth (+50%)

Bullish short-term technicals

Strategic assets in hospitality sector

Cons

Very high valuation (P/E 139)

Weak ROE and ROCE

No dividend

High debt

Chalet may offer short- to medium-term upside, but long-term returns are uncertain unless profitability improves significantly.

🏁 Exit Strategy / Holding Period

If you already hold this stock

Short-Term: Hold; MACD suggests near-term strength

Medium-Term: Consider partial exit near ₹950–₹1,000 if valuation remains stretched

Long-Term: Hold only if ROE improves >10% and PEG drops below 1.5

Exit fully if price crosses ₹1,050 without earnings support, or if profit growth slows sharply.

Would you like a comparison with other hospitality stocks like Indian Hotels or Lemon Tree to assess relative value and growth potential?

Edit in a page