Strong Q2 growth tempered by margin compression, renovation cycle impact

Standalone revenue 395 Cr for Q2 (standalone metric), consolidated Q2 revenue 784.1 Cr YoY +9.3%

Delivered Q2 shows strong volume but margin compression (OPM 20.3%) indicates cost headwinds offset revenue gains

Upgrade value growth 26% corroborates momentum; sales growth 6% modest given brand strength; Keystone still in acceleration phase

Mostly renovation keys (442 keys explicitly under renovation); net new capacity contribution limited in near term

Ambitious target reaffirmed but capex at INR312 Cr H1 and HCRO losses (INR18 Cr) create execution risk; 85% visibility claim vague

Prior call indicated 1,000 gross keys delayed Q1; now clearly 442 keys under renovation to return Q3-Q4, plus new greenfield. Net new capacity add is smaller; mostly renovation-driven.

H1 capex INR312 Cr vs INR166 Cr prior year (88% increase); investment in transformation and new inventory projects; margin compression visible in Q2 OPM 20.3%.

Sales growth 6% YoY, not double-digit; upgrades strong at 26% but overall Keystone contribution modest vs. hype in prior calls. 'Acceleration' phase language suggests ramp is ongoing, not yet mature.

H1 net loss INR18 Cr vs INR27 Cr prior year; stable revenue but operational challenges in Finland continue. Strategic review in progress; no near-term turnaround signaled.

Cost of acquisition reduced vs prior year; organic and digital channels contributed 66% of member additions (3.03 Lakh members added). Efficiency gains offsetting volume growth.

10-year Ivory product is most preferred (80% portfolio), followed by 5-year product. Keystone still in sales familiarization phase; sales acceleration ongoing. 10-year long-tenure preference indicates strong member confidence.

Algorithmic allocation based on member booking patterns (advance booking, cancellation, occupancy trends). Occupancy typically 80-81% full-year; Q2 75.6% not representative. Targeting ~80%+ occupancy with algorithm-driven allocation.

Limited occupancy impact so far; domestic driving holidays compensating for lower air travel. No major impact expected into Q3; not pulling back expansion plans. Cost inflation on projects is a concern but execution continues.

Sales force capacity is fixed; organic and digital channels driving 66% of additions. Fee increases planned for next 6 months. Marketing spend modest; rebranding (Club M) and brand spend in Q3-Q4.

75.6% Q2 not representative; expected 80-81% full-year. Algorithmic allocation handles member vs non-member booking patterns; occupancy climbing as Q3-Q4 progress with renovation keys returning.

Ganpatipule expected Q3-end, Q4 start. Kumbalgarh complete renovation Q3. Poovaar opened. Jaisalmer, Gir expected Q3-Q4. ~6 projects ongoing; ~equal capex spend next 6 months to complete.

Luxury family/tribe positioning, INR20,000 ARR target (vs. Club Mahindra). Experience-forward, discovery-based, local F&B elements. Family redefined (groups of 2-3 families). Different positioning than core Club Mahindra.

Exit driven by customer feedback (2-3 verbatim surveys, AI tool scanning sentiment). Minimum quality threshold set; 650 keys expected to exit total by end of year. Exits focus on lower-rated properties; continue through portfolio transformation.

85% visibility on F30 target; 1,500 keys balance remaining to reach 10,000. Locations evaluated by source market (India regions) and destination (2-4 hours preferred). Funnel shows 3 categories: established, emerging, pioneering destinations.

Minimal forex impact this year (prior year had euro adverse move). Finland economy improving than last year; profitability will improve as quarters progress. Strategic review in progress; no conclusions yet. Lease accounting impacts are part of HCRO losses.

Referrals are 40-50% of new sales (consistent trend). Retention improving: 12-month retention up from ~11%. Cancellations stable, retirements are part of net reduction. Non-member business growing; corporate/MICE emerging as upside.

Non-member bookings growing; corporate/MICE seeing good uptake. Small fraction of current revenue but growth opportunity as resort base expands. Reaching out to corporates; member-to-room allocation algorithm allows flexibility for non-member utilization.

Investing in 3 areas: capabilities (loyalty program, experience), renovation/shutdown (revenue drag temporarily), and new properties (not immediately profitable). All 3 levers moving differently. Margin improvement expected as renovated resorts return and new properties mature.

70% of capex towards new resorts, 30% towards existing resort improvements. Focus is long-term view; capex will be ongoing. H1 cash generation in line with prior year; invested almost double. Relying on internal accruals and deferred revenue for expansion.

65% of sales from VO business (deferred revenue bucket). Member acquisition cost reduced vs prior year; organic and digital driving 66% of additions. Deferred revenue recognition depends on member vacation patterns (not seasonal for VO business).

H2 typically more profitable. Q2 usually worst quarter. Q3 softter, Q4 typically strongest. As volume increases in H2 and renovation keys return, margins expected to improve. GST and other headwinds should ease.

442 keys under renovation expected Q3-Q4; greenfield projects (Ganpatipule, Kumbalgarh, Jaisalmer, Gir) targeted for completion

1,500 keys balance remaining; 8 ongoing greenfield/brownfield projects; 3-year execution window; capex at INR312 Cr H1 indicates sustained investment

Q2 OPM 20.3% compressed due to capex, GST solar subsidy, renovation drag. Management expects margin recovery as volume scales and investments phase into revenue generation.

Q2 typically worst quarter; Q3 softer; Q4 peak holiday season. Occupancy expected to climb in Q3-Q4 as renovation keys return.

70% towards new resorts, 30% towards existing improvements. Spread across Ganpatipule, renovations, new inventory projects. Funded via internal accruals and deferred revenue.

442 keys under renovation must return in Q3-Q4 as promised; delay would crimp H2 occupancy and revenue growth targets. Lumpy ramp could volatilize quarterly results.

HCRO (Holiday Club Resorts Finland) is loss-making; H1 net loss INR18 Cr. Strategic review underway; no turnaround timeline or resolution signaled. Drag on consolidated PAT.

H1 capex INR312 Cr (88% increase vs prior year). New resorts and renovation projects may not generate target returns if member demand softens or project completion delays.

Q2 occupancy 75.6% (elevated); management says 80-81% is normal full-year. Risk if seasonal peak (Q3-Q4) does not materialize or member demand weakens amid macro uncertainty.

Keystone luxury segment sales growth 6% YoY is modest; upgrades 26% strong but overall Keystone contribution to consolidated revenue not quantified. Risk if luxury segment adoption slows.