Samhi Hotels – Turnaround with Tailwinds

I was doing some back calculation based on the management commentary. Following are the points, I have captured from the last earning call:

• Free cash flow generation for the FY25 will be around 225-250cr

• Cash equivalent as of fy24 was 262cr and at the end of fy25 should be 512cr.

• EBITDA will be around 3.5x Net debt
  Net Debt = Total debt – Cash and cash equivalent.

• Net Debt as of q1 fy25 is 1862cr and at the end of fy25 should be around 1620cr. I am just deducting the anticipated cash flow of 250cr.

• So, the EBITDA should be around Net Debt/3.5, i.e, 460cr

PAT= EBITDA(460cr) – Depreciation(120cr) – C G&A(14cr, 3-4% of EBITDA) – Interest cost(200cr)
PAT= 126cr

Cash flow = EBITDA(460cr) – C G&A(14cr, 3-4% of EBITDA) – Interest cost(200cr)
Cash flow = 246cr

This is precisely the cash flow number that management outlined in the last earning call; hence, this somewhat proves the fact that the EBITDA for fy25 should be 460cr.

The valuation of 21x is the bare minimum; from my understanding, as this is the average valuation of the last 12 months. Although, I believe over the next 2 years the valuation should re-rate and thereby match that of peers such as Chalet, whose valuation is 33x.

EV= 460×21=9660
Mcap = EV-NetDebt = 9660-1612 = 8048cr

77% upside from here, i.e, the share price could be around 366 from 207 as on today.

Disc: Invested and biased