Earnings Call Transcript - XNSE:VENTIVE 2026-11-03

Operator

Ladies and gentlemen, good day and welcome to the Q2FI 2027 conference call hosted by Ventivhospitality. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. During your session during the conference call, please signal an operator by pressing star and then zero on your touchstone phone. I now hand the conference over to Ms. Aishwarya Vyar from Investor Relations Department at Ventivhospitality. Thank you. And over to you, Mr. Shuriya.

Aishwarya Vyar, Head of Investor Relations

I would like to highlight that the management may make certain statements that may constitute forward-looking statements. Please be advised that our actual results may differ materially from these statements. Venti Hospitality does not guarantee these statements or results and is not obligated to update them at any point of time. Specifically, any financial guidance and pro forma information that we shared on this call are management estimates based on certain assumptions and have not been subjected to audit review examination procedures. Venti does not guarantee these statements and is not obliged to update them at any time. Joining me today on the call are Ranjit Bhatta, Chief Executive Officer, Paresh Bhathna, Chief Financial Officer, and Shohab Sharif from the Investor Relations team. We will start off with brief remarks on our business and financial performance and then open the floor for questions. Over to you, Ranjit.

Ranjit Bhatta, CEO

Good afternoon, everyone, and thank you for joining us. Last quarter, I spent a good part of my opening remarks on diesel. and the West Asia conflict. This quarter, I'm happy to say the story is quite different. In what is seasonally our softest quarter, operating revenue grew 13% and operating EBITDA grew 11%. Double-digit growth in the monsoon quarter in TREFPA and REFPA of both 18% each is something I'm really proud of. Let me start with India. Once again, we grew both on rate and occupancy. ADR grew 11% to 12,629, and occupancy went up 2 points to 68%. Taking REFPA up 15% to 8,606, and REFPA grew 14%. India's operating revenue grew 11% to 207 crores, and operating EBITDA grew 8% to 80 crores, at a 39% margin. I'll be upfront, EBITDA could have grown faster. This quarter of investing was for our investing in our product. Aloft Whitefield is shut for its conversion to AC by Marriott. A few wings at the Hilton Goa were also closed for refurb, and some of the F&B outlets were being renovated. Additionally, this quarter also absorbed the impact of the new wage code, and last year we enjoyed some one-off benefits, such as the export incentive at the Rich Carton and the electricity surcharge We were on our Aloft ORR Bangalore. Adjusting for these factors, our India EBITDA would have grown to 11% year-on-year as opposed to 5%. MICE remained a big driver in Pune, contributing 7% of revenue at our flagship hotel, JW Marriott and the Ritz-Kartam. JW Marriott Pune hosted 12 BRICS communication ministers meeting around 5,000 delegates over 11 days. He also launched Yala, a new Mediterranean restaurant at the Ritz-Carlton Pune, which we expect to do around 1.5 to 2 crores a month, adding to an award-winning F&B portfolio at the Ritz. On recognition, the Ritz-Carlton Pune received its first Michelin key this year. The only three Marriott hotels in India that have a Michelin key, and Soho House Mumbai retained its key for the second year. Only a handful of hotels in India, which are not pure play leisure, hold a Michelin key, and two of them are ours. At Ventiv, we are obsessed with our product and service, so this recognition means a lot. Coming to Maldives, which is for me the highlight of this quarter. After fuel hit Q1, where EBITDA declined 32%, we are firmly back to growth in just one quarter. Revenue grew 20%, 213 crores, and operating EBITDA grew 25% to 30 crores. TREFPA grew 20% to 45,000 rupees, and occupancy went up 3 points to 57%. We grew occupancy in an off-season affected by elevated airfares and lower tourist arrivals year-to-date, which shows how we gained market share while still growing TREFPA by 20%. We've always been saying that luxury demanded and Maldives as a market is very resilient, and even more so in uncertain times. And you'll see that we will continue to do well. We have three resorts and three different price points in Maldives, all of them recently upgraded. That gives our commercial teams a lot of flexibility to go after high-paying guests from the right global markets. Diesel prices have come down by about 31% from the April-May peak, but they're still 1.5 times of last year's levels. So this quarter was not a quarter where the market did the work for us. Our teams did. Our solar program across Raya, Conrad, and Anantara is progressing as planned. I will be able to run generator-free for around 17 hours a day for the first resort to do so. The aim is simple. A diesel shock like Q1 should not hurt us the same way again. Our annuity business did what it always does. Revenue grew 5% to 131 crores, and EBITDA was 117 crores at 90% margin. It committed occupancy of 98% across 3.4 million square feet. Steady and predictable. On growth, we have over 1,500 keys under development. AC by Marriott Whitefield and Varanasi Marriott are progressing towards Q1, FY28, and Q3, FY28 opening. At Shihadri Hills, India's first rich carton reserve, we are finalizing the master plan with the vision of making India's best leisure and wellness resort, along with branded residents. As you know, this will be the only 10th rich carton reserve in the world, so this is something really special. The FY29 launch timeline remains firmly in place. Looking ahead, we're entering our strongest half of the year in both markets. In India, we have the wedding season and strong mice calendar. In the Maldives, it's high season, diesel is easing, and business on the books in F2 looks very healthy. Our priorities don't change. Grow Refpa and Refpa. Widen margins through hands-on asset management, deliver the pipeline Thank you, Ranjit.

Paresh Bhathna, CFO

Good afternoon, everyone. Before I discuss the quarter, a brief note on comparability. Q2F527 and Q2F526 are presented on like-for-like reported basis. The principal items affecting comparability are Alloft Whitefield, which remain non-operational, Soham Leisure, Finest, and Sol de Goa, which was not part of our portfolio in the previous year. According to all operating metrics, exclude non-operational keys of Alloft Whitefield and Sol de Goa. Coming to Q2 FY27 performance, the group delivered another quarter of healthy Consolidated EBITDA decreased 5% year-over-year to 242 crore due to lower other income which was primarily attributable to lower foreign exchange gains, ICD interest income, export incentives. Employee expense increased due to implementation of the new wage code across the group. Excluding these non-operating movements, the operating EBITDA of 211 crore grew 11% year-on-year, reflecting the resilience of a business model and the continued strength of a diversified portfolio. Finance costs remain at similar levels despite gross debt going up by 11% year-on-year, reflecting group's commitment to optimize the finance cost and debt management. Tax expense declined 16% year-on-year to 47% growth, benefiting from the transition to this new tax regime implemented in the previous quarter. Reported back for the quarter declined 47% year-on-year. I want How to address this upfront? Primarily, a consequence of higher depreciation and amortization, which increased from 79 crores last year to 102 crores this quarter. This increase reflects acquisitions, refurbishment programs, and strategic capital expenditure undertaken to expand and strengthen our portfolio. Importantly, cash generation is the ultimate measure of business quality and long-term value, which is envisaged by group's cash profits increasing 16% year-on-year to 190 crores, despite the decline in reported past. This demonstrates that the underlying operating performance remains robust, and the investments we have made are translated into stronger cash earnings. Overall, the quarter reinforces the strength of our underlying operating fundamentals with double-digit revenue growth, healthy operating profitability, and continued investment in future growth platforms. Coming to H1-FY27 performance, H1-FY27 was about two things, profitability growth and balance sheet discipline. For the first half of FY27, consolidated revenue increased 6% year-on-year to 1137 crores, while EBITDA reached 446 crores, declining 6% year-on-year. EBITDA adjusting for diesel price impact in Maldives, another one of increased 3% to 483 crores, representing a healthy margin of 43%. The Indian annuity business continued to provide stable growth and earning support, while Maldives returned to a positive growth curve during Q2. The growth was driven by a combination of higher occupancy and improved ADR. Other income for the half-year was 43 crores compared to 78 crores in the previous year. Despite this reduction, PAT increased by 53% to 158 crores, supported by strong operating performance and tax structuring during Q1. Coming to the balance sheet and capital structure, as of 30th September 2026, broad debt stood at 2,366 crores, comprising 1,188 crores of The group continues to maintain a strong liquidity position with cash and cash equivalent of 507 crores, resulting in a net debt position of 1,859 crores. Following the acquisitions of salary health, net debt to EBITDA increased to 1.6x from the 1.2x in the previous quarter. However, leverage remains well within comfortable levels with a loan-to-value ratio of approximately 0.2x, providing substantial balance sheet capacity to support future growth opportunities and capital commitments. We are also pleased to maintain our Crystal AA stable rating, reflecting the strength of our asset base, prudent financial management, and consistent cash generating capability. Bente's financial performance continues to reflect strength and resilience, reaffirming that our growth aspirations and strategic direction remain well aligned with prevailing market dynamics. A balance sheet is prudently leveraged, providing us with the flexibility to respond effectively to opportunities and challenges as they arise. In summary, the quarter was characterized by strong operating momentum, double-edged revenue growth, and continued progress across all three business verticals. While Maldi is returning to growth, India is sustaining momentum, Are we good to take questions, sir?

Aishwarya Vyar, Head of Investor Relations

Yes, please.

Operator

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants have requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Operator

We have the first question from the line of Archul Kumar from HSBC.

Anshul Kumar, Analyst — HSBC

Please go ahead. Yeah, hi. Thanks for taking my questions. So, you know, the first question I had about the profitability in Maldives, so you have presented a chart where you're showing that diesel price was down almost 31% from the first quarter to the second quarter. I think broadly that was not the case. So did you buy in advance or how did you successfully lower your diesel price? But then, I think more importantly, what confused me is that, you know, while your diesel price was down 31%, which is one of the major cost contributing in Molle, your EBITDA margin was still lower than Q1. So Q1, you were 15%. Q2, you were 14% EBITDA margin. I thought it should have been other way around if your diesel price went down. So any color on that, please?

Ranjit Bhatta, CEO

Hi, Arshad. Yes, Anshul Ranjit, thank you for your question. Yeah, there is no denial, fuel is still elevated. I think due to you, diesel average is around 1.1. So your question of the diesel price going down 31% is lower from the peak, but it's still ahead by 1.5 from last year. So, I think that's where I hope I'm able to clarify, and that's where if you want an absolute number, the added cost this quarter was actually 12 crores versus around 20 crores last quarter, to substantiate with an absolute number. So, apart from this, Anshul, I can elaborate on other things that we're doing. So, it's not like we're just waiting for the diesel price to go down and increasing our margin. We are working very hard on a lot of our pricing, quicker decisions that we need to take, especially on energy-saving initiatives on our HVAC, energy guzzling areas like our desalination plants. I think that's where we have really focused on. What we're also seeing is the solar program, which is coming into play. I think you'll not see any of these blips going forward. And it's just around the corner. Everything is going to be installed in Raya, for example, in January itself. So we will see less dependency on diesel going forward, and the initiatives, especially by the cluster purchase, where we've actually put in a lot of discipline on cost-saving initiatives, et cetera, is coming into place. Our negotiated rates with our vendors, our seaplane connectivity is still in place, and, of course, the big jump on our occupancy and our trap bar is one of the reasons, is the main reason for our growth.

Anshul Kumar, Analyst — HSBC

Right. No, sorry. The second part of my question was about the EBITDA margin. So what I'm not able to understand or what I don't get is that if your fuel price, if your diesel cost was down 31% quarter on quarter, and I'm talking about quarter on quarter, why your EBITDA margin was lower quarter on quarter? That's what my question is. What's playing in there? You know, in Q1, your EBITDA margin in international business was 15%, and Q2, your international business EBITDA margin was 14%, despite the fact that your diesel price was down 31% quarter and quarter. So what's going on there, please?

Ranjit Bhatta, CEO

Actually, if you see the numbers and related to last year, it's actually flat. This is very typical of Maldives in the low quarters and not unusual at all. And I don't, there's no decline. You can see it as flat and you can actually put in the diesel high rates and yet being flat as a positive.

Anshul Kumar, Analyst — HSBC

Okay, fair enough. And then my second question was about, you know, also your effective interest cost has gone up in this quarter versus last quarter. What's going on there? Have you taken expensive debt or like how should we think about it, especially the INR debt?

Paresh Bhathna, CFO

The interest costs have gone up slightly, and one of the reasons is, you know, we did our acquisitions for, you know, we had acquisition finance for our Bruja project. Also, during this quarter, in the later half of the quarter, you know, we had a 25 basis points increase in our cost, which was, you know, as per the government, but around, I think, 8 to 10 basis points were passed on to the Vente portfolio. Thank you. Apart from that, you know, I think we are still very competitive in our interest rate, and we keep on working on getting the interest costs down. But these are some factors which are, you know, we can look at, you know, going forward how to reduce the cost. But right now, we are still very competitive in our interest rate.

Anshul Kumar, Analyst — HSBC

Okay, fine. And finally, my last question is about the H2. So you have mentioned that H2 is very strong, and obviously that's very strong. But can you please give us a bit of a color, given that we are already in November, any color on Q3, maybe Q4 is still away. On Q3, on your India business, as well as your Molle business, and if you can divide that by sort of, you know, how the Maish business we should think about, how the room revenue we should think about in the third quarter, please.

Ranjit Bhatta, CEO

Okay, let me try to give you a very concise answer to this. So, let me put it in context in H1, for example, and then I'll pivot it to H2 without giving too many numbers, forward-looking numbers. So, in H1, operating revenue grew 10%, and the operating EBITDA grew 2%, and that includes the Q1 diesel shock that we spoke about before in the Maldives. So, Q2 itself operating EBITDA grew 11%. So, H2, moving to H2, is our seasonally strongest half in both India and Maldives. So, in H1, we already saw occupancy at 68%, and we estimate H2 occupancies of more than 70%, and ADR, I'm talking about India, north of 14,500. So, very healthy mice and events in our Puna hotels portfolio. We'll have one or two of our key outlets also fully backed operationally with a brand new offering as a fantastic new products relevant to today's time. And we are also seeing air traffic improving month on month, so that will also yield to higher occupancy. Regarding Maldives, high season, and the diesel price easing out, the best quarters, and these are our favorite quarters, the business is on the books, is looking very, very healthy. You'll see better growth in H2 for Q3 in terms of business on books. We already have about 67% of our forecasted revenue on books, which is very, very healthy, resulting in, I think, Mid-teen revenue and EBITDA growth, to give you a flavor, revenue and EBITDA growth, both in the mid-teens, and 70% occupancy plus. So, looking at the business on books, you'll see even better growth in H2.

Anshul Kumar, Analyst — HSBC

Okay, perfect. Thank you. I have questions, but I'll come back in the queue.

Operator

Parasamit, who wish to ask a question, may press star and one on your touchtone telephone. We have the next question on the line of Vinay Rawal from Choice Institutional Equities. Please go ahead.