Buy SAMHI Ltd for the Target Rs.200 by Choice Institutional Equities
West Asia Disruption Weighs on Q4; May 2026 fairs better
West Asia conflict continued to adversely impact SAMHI’s operating performance in Q4FY26; however, lower base in Q1FY26 has led to improvement in the upcoming quarter. Q4FY26 revenue grew 8.2% YoY, while RevPAR increased only 1.4% YoY. EBITDA margin for Q4FY26 was affected by softer demand, pushing ARR below the threshold of INR 7.5K. The margin was also hit by GSTrelated changes (~INR 140 Mn in H2FY26). Further, the margin was dented due to one-off pre-opening expenses and other cost. Growth visibility remains strong, supported by a robust pipeline including the near-term launch of WHyderabad in FY27E (170 keys) and stabilisation of SAMHI’s recentlyopened assets. The company’s focus on capital-efficient expansion, FCF generation and balance sheet deleveraging reinforces our thesis.
View and Valuation
We revise our FY27E/FY28E revenue estimate downwards by 3.1% / 4.7%, respectively, factoring in weaker inbound demand and delay in execution of one of the hotel assets. We lower our EBITDA margin estimate by ~1pp for FY27E/FY28E, incorporating margin pressure from GST-related changes and inflationary scenario. We believe SAMHI’s stronger balance sheet and stabilised cashflow will support incremental growth projects. Hence, we revise EV/Adj. EBITDA multiple to 10.0x for FY28E (vs. 9.0x earlier), arriving at a Target Price of INR 200 (maintained). Our DCF-derived valuation of INR 200/share provides a sanity check. We, therefore, maintain our ‘BUY’ rating on the stock, implying an upside of 36.1%.
Key Risk to our Valuation
Possibility of prolonged geopolitical disruption impacting inbound travel demand, probable execution delays/cost overruns across upcoming developments and incremental supply in key micro-markets.
West Asia Conflict Squeezes Margin despite RevPAR Gains
* Overall RevPAR grew by just 1.4% for this quarter, negatively impacted by geopolitical disruption
* Revenue grew 8.2% YoY to INR 3.5 Bn
* EBITDA decreased 9.5% YoY to INR 1.1 Bn, while margin declined 631 bps to 32.4%
* Reported Profit for the quarter came in at INR 4.0 Bn
OCF Generation to Fuel Key Growth, Further Deleveraging Expected SAMHI is targeting a robust owned hotel expansion pipeline across Hyderabad, Bengaluru, NCR and Chennai, with keys expected to expand at a 7.6% CAGR (FY26 –FY30E), while maintaining a capital-efficient strategy. We anticipate SAMHI to generate ~INR 600 Mn/year of cashflows, broadly sufficient to fund its planned capex pipeline of ~INR 11.4 Bn. Additionally, we forecast Net Debt/EBITDA to decrease from 3.5x in FY26 to 2.1x in FY28E. Long-term earnings’ growth is supported by upgrades of certain assets from Upscale to Upper Upscale and the acquisition of the experiential luxury brand ‘RARE India’.
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SEBI Registration no.: INZ 000160131
