Buy SAMHI Ltd for the Target Rs.200 by Choice Institutional Equities
Key Conference Call Highlights
Operational Performance
* FY26 same-store RevPAR grew 9.5% YoY to INR 5,365, while Q4 RevPAR rose 13% YoY to INR 5,643
* Q4 ARR increased 15.9% YoY, while occupancy moderated slightly to 73% due to temporary travel disruption
* ‘Sold-out’ days (90%+ occupancy) accounted for ~30% of operating days in the past nine months, reflecting sustained demand strength
Strategic Initiatives & Growth Pipeline
* SAMHI continues to premiumise its portfolio, targeting rise in Upscale/Upper-Upscale contribution from ~43% at present to ~60% in the medium term
* Operational inventory stands at 5,914 rooms, with ~1,700 rooms under development/rebranding
Key Growth Projects Include
* W Hyderabad (170 rooms): Under going fit-out; expected to materially enhance ADR profile
* Navi Mumbai (~700 rooms): Construction underway; targeted stabilisation EBITDA of ~INR 1.45 Bn
* Noida Sector 51 (162 rooms): Upscale lease signed with Ingka Centres
* Acquired 70% stake in ‘RARE India’ to strengthen Marriott-linked experiential leisure offering
* The management reiterated its ‘build over buy’ strategy, focusing on organic expansion and high-return assets
Balance Sheet & Capital Allocation
* Net debt/EBITDA improved sharply from 5.3x post IPO, in September 2023, to ~3.0x; medium-term target remains ~2.5x
* Effective borrowing cost reduced to 7.9% through refinancing and deleveraging initiatives
* GIC invested INR 7.5 Bn for a 35% stake in SAMHI’s ~1,000-room platform, supporting growth while de-risking the balance sheet
* Sale of four non-core hotels generated ~INR 2.1 Bn (~20x EV/EBITDA), aiding deleveraging and funding growth capex
* The management highlighted that strong FCF generation and GIC proceeds are expected adequately fund the ongoing capex pipeline
Macro Headwinds & One-Off Impact
* FY26 revenue was negatively impacted by ~INR 440–520 Mn due to multiple one-off disruptions, including the India–Pakistan conflict, severe monsoons, airline disruption and the Middle East conflict
* The management acknowledged continued geopolitical and travelrelated risks but indicated that structural premiumisation and ADR growth is likely to mitigate long-term profitability impact.
Outlook & Guidance
* Management reiterated its long-term ambition of achieving INR 30 Bn revenue by FY30E, supported by premiumisation, pipeline addition and operating leverage
* FY27E outlook remains constructive, with expectation of double-digit same-store revenue growth, continued ADR expansion and improving cash conversion
* Upcoming openings such as W Hyderabad and Navi Mumbai, are expected to be key medium-term growth catalysts and materially improve portfolio quality
* While the management remains focussed on deleveraging and reinvestment, it indicated that sustained free cashflow generation could eventually create optionality for shareholder returns in the medium term
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SEBI Registration no.: INZ 000160131
