Elara Capital Initiates Coverage On Samhi Hotels With 'Buy' Rating
Samhi is expanding its portfolio and rebranding properties, particularly in high-demand areas such as Bengaluru and Hyderabad.
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Elara Capital has initiated coverage on Samhi Hotels Ltd. with a 'buy' rating and a target price of Rs 308 apiece, implying a potential upside of 63% from the current market price of Rs 189 per share. The brokerage's analysis highlights the company's robust growth prospects, underpinned by strategic asset additions and value-driven portfolio upgrades.
Samhi Hotels Ltd., which primarily operates in high-growth markets like Bengaluru, Hyderabad, Pune and the National Capital Region, plans to add 857 hotel keys between fiscal 2025 and fiscal 2029, reflecting an 18% growth over its current inventory of 4,801 keys.
This expansion, coupled with a shift in focus towards the upper upscale and upscale hotel segments, is expected to drive the company's revenue and Ebitda at a compounded annual growth rate of 12% and 26% respectively between fiscal 2024 and fiscal 2027.
The company has a proven track record of transforming underperforming hotels and is further set to benefit from organic growth in average room rates and occupancy levels. Elara Capital expects Samhi Hotels' profit after tax to turn positive in fiscal 2025, reaching Rs 189.1 crore by fiscal 2027.
A key focus for Samhi is expanding its portfolio and rebranding properties, particularly in high-demand areas like Bengaluru and Hyderabad. Notably, the company plans to add 532 keys in the upper upscale segment across three hotels in these cities. One significant project includes the renovation and rebranding of the Trinity hotel in Bengaluru, which will be flagged under Marriott's Tribute brand, expected to drive a significant increase in revenue per available room following the upgrade.
Samhi’s focus on expanding its high-quality portfolio and addressing demand in India's fast-growing hospitality sector positions it well for continued growth. However, Elara Capital also flagged risks related to the potential sale of shares by private equity investors, which could put downward pressure on the stock price. Despite this, the brokerage views Samhi as undervalued and has a 'buy' recommendation with a target price of Rs 308, based on a 16x EV/Ebitda multiple for FY27.
