Buy Samhi Hotels Ltd For Target Rs.230 by Prabhudas Liladhar Capital Ltd
Subdued margin performance
We cut our EPS estimates by ~22% for FY27E/FY28E as we fine tune our debt & interest expense forecast given capex commitment of INR22,000mn over the next 5 years. Adjusting for the Middle East conflict, GST transition and certain one-offs; SAMHI IN’s operational performance was broadly in-line with our estimate with EBITDA margin of 38.4% (PLe 37.3%). Led by addition of 192 keys, same-store RevPAR growth of ~9-11%, and accrual of B2C income from acquisition of RARE India, we expect revenue CAGR of 17% over the next 2 years with EBITDA margin of 38.1%/39.6% in FY27E/FY28E respectively. SAMHI IN trades at attractive valuation of 10.0x/7.8x our FY27E/FY28E EBITDA estimates (after adjusting for the minority interest factor in JV platform formed with GIC). We maintain BUY on the stock with a TP of Rs230 (10.5x FY28E EBITDA; no change in target multiple).
Same store RevPAR increases 4.1% YoY:
Topline increased 8.2% YoY to INR3,449mn (PLe INR3,467mn). Same-store RevPAR grew 4.1% YoY to INR6,041 while occupancy stood at 75.0%.
EBITDA margin stood at 32.4%:
EBITDA decreased 9.5% YoY to INR1,116mn (PLe INR1,295mn, CE INR1,267mn) with a margin of 32.4% (PLe 37.3%). Operating performance was impacted by loss of ITC arising from change in GST rate, FF&E charge of INR50mn, pre-opening expenses of new inventory and ME crisis. PBT before exceptional items declined marginally by 0.9% YoY to INR447mn (PLe INR605mn, CE INR598mn) with a margin of 13.0%. Divergence at the PBT level was on account of higher depreciation which came in at INR382mn (PLe INR336mn). PAT after MI stood at INR3,537mn (PLe INR370mn, CE INR370mn) for the quarter. However, after accounting for DTA charge of INR3,210mn, impairment reversal of INR269mn on PPE and intangibles, and labour code impact of INR24mn, adjusted PAT stood at INR82mn.
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