Target: ₹290

CMP: ₹156.25

Samhi Hotels is a prominent branded hotel ownership and asset management platform with one of the largest inventories of operational keys (owned and leased) in India. Its portfolio comprises 4,801 keys across 31 operating hotels in 13 of India’s key consumption centres as on date. Through its acquisition and turnaround-led business model, Samhi has added 369 keys to its portfolio per year (since inception in FY11), making it the fastest-growing hotel owner.

Going forward, Samhi will renovate/rebrand 920 rooms and add 617 rooms (by FY28) to its existing portfolio. We like Samhi because of its ability to identify, acquire, and turn around underperforming assets and pan-India presence across price points. It is a play on both operating leverage (asset owner in an upcycle) and financial leverage (net debt at ₹1,840 crore, down 35 per cent compared to Mar’23; quarterly finance cost to reduce by 57 per cent to about ₹60 crore).

We estimate revenue/EBITDA to grow at a CAGR of 13/24 per cent over FY23-26 (pro forma portfolio).

Our target price is based on a 10 per cent discount to our target multiple for Chalet Hotels, its closest peer, mainly to reflect the absence of long-range historical operating data given that Samhi has just listed on the stock exchanges in Sep’23.