Concall Notes Q2
Business Overview:
- SAMHI Hotels Limited reported strong performance for Q2 FY25, with asset income of ₹266 crores, a 20% YoY growth.
- Same-store assets achieved a RevPAR growth of 16.5% YoY, driven by significant demand in core markets.
New Developments:
- Signed a long-term variable lease for a building in HITEC City, Hyderabad, to be converted into a 170-room upper-upscale hotel.
- Acquired an existing 142-room hotel in Bangalore, Whitefield, with plans for renovation and rebranding to the upscale segment.
- Development of an additional tower in Whitefield, expected to add 200 to 220 rooms to the portfolio.
Portfolio Growth:
- Secured a total of 525 rooms across three new upscale hotels in Bangalore and Hyderabad, enhancing the growth potential in core markets.
- The existing hotel portfolio is strategically positioned to capitalize on robust demand, with strong net absorption in office space and significant air passenger growth in Bangalore and Hyderabad.
Operating Performance:
- Same-store assets reported a 13.3% YoY revenue growth, leading to an EBITDA growth of approximately 20.2%.
- EBITDA margin improved to nearly 40%, indicating strong operational efficiency.
Internal Growth Initiatives:
- Integration of the ACIC Portfolio is progressing well, contributing to a 590 basis point margin improvement in Q2 FY25.
- Renovation and rebranding of the 137-room Caspia Pro in Greater Noida to Holiday Inn Express completed, with expected revenue contributions in the coming weeks.
- Approved conversion of commercial block in Sheraton, Hyderabad, into 42 additional rooms, operational by Q3 to Q4 FY26.
Capital Expenditure (Capex):
- Anticipated capex for Bangalore hotel renovation is ₹70-80 crores over the next 12-18 months, with an additional ₹270 crores for the new tower.
- Hyderabad asset capex is estimated at ₹180-190 crores, expected to be spent over the next 18-24 months.
Financial Guidance:
- Consolidated EBITDA for Q2 FY25 stood at ₹97 crores, an 80% YoY growth, with a consolidated margin of 36%.
- Net debt as of September 30, 2024, was approximately ₹1,880 crores, with plans to maintain a net debt to EBITDA ratio of 4.5x by the end of FY25.
Market Insights:
- HITEC City market shows strong performance with an average rate of ₹12,400 and RevPAR growth of 26% YoY in FY24.
- Management expresses confidence in the Hyderabad market due to limited new supply and strong demand drivers.
Strategic Vision:
- Management is focused on capital-efficient growth through variable leases, aiming to increase the share of revenue from such leases from 13% to 20% in the near term.
- Plans to recycle capital through divesting non-strategic assets to maintain a healthy balance sheet while pursuing growth opportunities.
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