ICICI Securities initiates 'Buy' on Brigade Hotel Ventures; sees 40% upside

ICICI Securities has initiated coverage on Brigade Hotel Ventures Ltd (BHVL) with a ‘Buy’ rating and a target price of ₹117. The target price implies an upside of 39.9 per cent from Thursday’s close of at ₹83.58 per share. Brigade Hotel Ventures, a subsidiary of Brigade Enterprises, is the owner and developer of hotels, primarily across South India.

 

At 12 PM, Brigade Hotel Ventures traded 0.14 per cent higher at ₹83.7 per share. In comparison, BSE Sensex was up 0.47 per cent at 81,932.27.

Why is ICICI Securities upbeat on Brigade Hotel Ventures?

Marquee hospitality labels

As of June 2025, BHVL’s portfolio includes nine operating hotels with 1,604 keys across Bengaluru, Chennai, Kochi, Mysuru, and GIFT City. While BHVL owns the assets, its hotels are operated by global hospitality majors such as Marriott, Accor, and InterContinental Hotels Group.

 

These hotels cater to the upper upscale, upscale, upper-midscale, and midscale segments, offering a comprehensive guest experience that includes fine dining, specialty restaurants, MICE (Meetings, Incentives, Conferences, and Exhibitions) venues, lounges, swimming pools, and spas. 

Ambitious expansion plans

BHVL aims to double its operational keys to 3,300 by FY29E. The company plans to develop nine new hotels with 1,700 keys across South India, entailing an estimated capital expenditure of ~₹34 billion over FY25–29 (assuming capex of ₹20 million per key). Beyond its current pipeline, the company continues to explore strategic expansion opportunities.

Strong parental support 

The company is a subsidiary of Brigade Enterprises, which is a real estate developer in India. Brigade Enterprises 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, Brigade Enterprises has a deep understanding of market trends and location opportunities, which enables the company to locate strategic land parcels for its hotels.

Outlook 

The brokerage builds in same-store Revenue Per Available Room (RevPAR) growth of 8 per cent for operational hotels over FY25–28E. The balance revenue contribution of 9-10 per cent stemming from new hotels and increased food and beverages (F&B) revenue over the medium term, which was 33 per cent of overall hotel revenue in FY25. 

 

Earnings before interest, tax, depreciation and amortisation (Ebitda) CAGR i sexpected at 20 per cent over the same period with Ebitda margins expanding 260 basis points (bps) to 37.7 per cent in FY28, as compared to 35.1 per cent 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, according to analysts.  

Key risks

Analysts highlight potential risks, including a slowdown in hotel occupancies or Average Room Rates (ARRs), and delays in the execution of upcoming hotel assets.