Growth pedal in top-gear
Quick Pointers:
▪ Same store RevPAR increases 11.2% YoY to Rs5,026 in 2QFY26.
▪ Navi Mumbai resolution paves way for SAMHI IN’s largest hotel with ~700 rooms in India’s financial capital.
While SAMHI IN reported healthy operating performance with EBITDA margin of 36.6% (PLe 34.7%); bottom-line missed our estimates due to higher interest and taxation. After improving BS health post fund infusion by GIC, SAMHI IN has pressed the growth accelerator with plans to open new hotels in Navi Mumbai/Hyderabad with ~700/~260 keys respectively. Given both these projects have a longer lead time of ~3-4 years with strong FCFF generation in interim, we expect debt/EBITDA to be at 3.2x/2.6x/1.9x in FY26E/FY27E/FY28E alleviating concerns over excessive leverage. We expect top-line CAGR of 14% over the next 3 years led by addition of 273 keys with an EBITDA margin of 37.4%/38.7%/41.2% in FY26E/FY27E/FY28E. SAMHI IN trades at attractive valuation of 11.1x/8.8x 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 Rs305 (14x Sep-27 EBITDA; no change in target multiple).
Same store RevPAR increases 11.2% YoY: Topline increased 11.8% YoY to Rs2,930mn (PLe Rs2,906mn). Same-store RevPAR grew 11.2% YoY to Rs5,026 while occupancy stood at 75.0%.
EBITDA margin improves by 147bps: EBITDA increased 16.5% YoY to Rs1,071mn (PLe Rs1,008mn) with a margin of 36.6% (PLe 34.7%). PAT after minority interest stood at Rs924mn. After adjusting for an exceptional gain of Rs145mn pertaining to sale of Caspia hotel and reversing an impairment charge of Rs571mn (net of tax) pertaining to Navi Mumbai property, adjusted PAT after minority interest was up 110.2% YoY to Rs234mn (PLe Rs281mn) with a margin of 8.0% (PLe 9.7%).
Con-call highlights: 1) SAMHI IN has reaffirmed same-store RevPAR growth guidance of ~9-11% over the next 3–5 years. 2) Over 1,500 rooms are under development or rebranding, which will take SAMHI IN’s portfolio to 6,300+ keys in future. 3) Phase-1 of the Navi Mumbai project will comprise 400 rooms, with a potential to expand to 700 rooms. 4) Total capex for Navi Mumbai project is pegged at ~Rs10,000mn. This includes Phase 1 spends of Rs6,500mn spread over 3–4 years, and factors in upfront MIDC premium for lease extension (Rs750–800mn) and additional FSI charge of ~Rs1,000–1,500mn with no recurring lease rentals payable thereafter. 5) Both hotels at Navi Mumbai and the upcoming leased asset at Hyderabad will be housed under the standalone entity (not a part of JV platform formed with GIC). 6) The Navi Mumbai asset is expected to generate ~Rs1,800–1,850mn in annual EBITDA at full potential. 7) SAMHI IN plans to open a 260-room mid-scale hotel in Hyderabad under a long-term variable lease model, entailing a capex of ~Rs1,250-1,430mn 8) W, Hyderabad (170 rooms) remains on track to open by Dec’26. 9) SAMHI IN’s average interest cost currently stands at 8.4% and is expected to fall below 8.0% by FY27E driven by ongoing refinancing initiatives. 10) Total capex outgo over the next 5 years is pegged at Rs15,000mn (excluding the share of GIC) including all active and upcoming projects but excluding phase-2 extension at Navi Mumbai. 11) Net Debt/EBITDA is expected to stay ~3x in the short term and decline to 2.5x in the medium term as new projects ramp up. 12) At Trinity, Bangalore, initial upgrades of Rs80mn have been made with additional investment of Rs200–250mn lined up for further improvements. 13) Around 55-60% of SAMHI IN’s loans are repo-linked, while 20% are at a fixed-rate and the remaining ~20% are linked to MCLR.
