Results: Chalet Hotels Limited Beat Earnings Expectations And Analysts Now Have New Forecasts

Investors in Chalet Hotels Limited (NSE:CHALET) had a good week, as its shares rose 9.1% to close at ₹835 following the release of its first-quarter results. Revenues were ₹3.6b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of ₹2.78 were also better than expected, beating analyst predictions by 16%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Chalet Hotels

Taking into account the latest results, the consensus forecast from Chalet Hotels' 13 analysts is for revenues of ₹17.9b in 2025. This reflects a huge 21% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 59% to ₹18.20. In the lead-up to this report, the analysts had been modelling revenues of ₹18.3b and earnings per share (EPS) of ₹17.64 in 2025. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

The consensus has made no major changes to the price target of ₹888, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Chalet Hotels at ₹990 per share, while the most bearish prices it at ₹715. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Chalet Hotels shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Chalet Hotels' growth to accelerate, with the forecast 29% annualised growth to the end of 2025 ranking favourably alongside historical growth of 13% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 18% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Chalet Hotels is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Chalet Hotels' earnings potential next year. They also downgraded Chalet Hotels' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Yet - earnings are more important to the intrinsic value of the business. The consensus price target held steady at ₹888, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Chalet Hotels. Long-term earnings power is much more important than next year's profits. We have forecasts for Chalet Hotels going out to 2027, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Chalet Hotels you should be aware of, and 1 of them is potentially serious.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com