Samhi Hotels Ltd (SAMHI) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the Q2 and H1 FY '27 earnings conference call of SAMHI Hotels Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star and zero on your touch-tone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Ashish Jakhanwal, MD and CEO of SAMHI Hotels Limited. Thank you, and over to you, sir.
Ashish Jakhanwal (SAMHI Hotels Limited): Thank you so much. Good morning, everyone, and welcome to SAMHI Hotels' quarter financial year '27 earnings call. Thank you for taking time to join us today. I am joined by my colleagues, including our CFO, Rajat Mehra. We also have our investor relations partner, Strategic Growth Advisors, also on the call. We have uploaded our quarter two and H1 FY '27 financial results and investor presentation on the exchanges and on our website. And I hope everyone's had a chance to go through them. I'll start the call today by covering our performance, strategy, and pipeline. And then I'll request Rajat to take you through the financial statements. And subsequent to that, we'll close with an outlook before we open for questions. Let me start with the headlines. Our same-store revenue
Ashish Jakhanwal (SAMHI Hotels Limited): by 12.6%. This is ahead of our long-term guidance of 9% to 11%. RevPAR growth for the same-store hotels was up about 14%. And in this quarter, it was driven 9% by average rates and about 3.6 percentage points in occupancy. For the quarter, our hotels ran at a 78.6% occupancy, up from 75% a year ago. We have now seen 6 months of near 80% occupancy levels, demonstrating strength of our markets and our products. On 37% of nights in the quarter, our portfolio was above 90% occupancy, effectively sold out. A year ago, that figure was 32%. More compressed nights give our revenue manager more pricing power. Even though we are a high-inflation environment with fuel prices and impact of currency depreciation on imports, yet, our business delivered 60% flow-through in the reported quarter before accounting for loss of input tax credit. About 80% of the room nights we sold this quarter were to domestic travelers. Much of that demand is created locally by the offices, GCCs and industrial parks around our hotels. The office space supports this. Bangalore and Hyderabad, our two largest markets, together absorbed about 7.9 million square feet of office space on net basis this quarter alone against 5.1 million sq ft a year ago. Hyderabad alone more than doubled from 1.6 to 3.8 million square feet of net absorption in a quarter. Every one of those square feet became room nights, meetings and dinners in our micro markets over the next several years. While the airline data shows declining passenger traffic for the quarter over previous year, but this is not a demand issue. With higher fuel prices, several routes are rationalized and this is compressing the supply. In terms of pipeline, while the base business compounds, we're building the next leg of growth. Our secured pipeline adds about 1,670 rooms and moves another 473 rooms upmarket through rebranding. By FY '30, we expect upper and upper-upscale to rise from 42% of our income to about 60%. This is important because if you see the last 6 months, the EBITDA performance of our upscale hotel was almost 800 basis points ahead of the broader portfolio. So as we move the portfolio from 42% upscale to 60% upscale, it has a material impact on our reported EBITDA margins. I'll give you some update on specific projects starting off with 170-room W Hotel in HITEC City, Hyderabad. We believe it's a landmark asset in our pipeline and now it is in the final stretches. MEP, facade, fit-outs, all streams are making good progress. We remain on track to open in Q2 FY '28. W will be one of the highest-rated products in our portfolio along with Courtyard by Marriott Bangalore in one of the India's deepest office markets. On a stabilized basis, we expect it to add about 10% to our FY '27 income base at margins above our portfolio average given our existing Marriott clustering in Hyderabad and no impact of GST regulation change given most if not all rooms will be sold above INR 7,500 rate threshold. The next is the Westin and Tribute portfolio, Whitefield Bangalore with 142 existing operating rooms and 220 rooms being added. The existing 120 142-room Trinity hotel is being renovated in phases into a Tribute Portfolio by Marriott. The Westin tower site has moved from excavation in Q1 to basement construction in Q2, and each quarter you will see the building slabs being added at a rapid pace. We are very bullish about the performance of this combined 370-room upscale hotel in a very strong market. The other upscale hotel at Ingka Centre Noida with 162 rooms is also making great progress. The hotel is a part of 2.5 million square feet of mixed-use development with direct access to retail and offices. It is in a long-term variable lease. So our upfront capital during construction is limited. The project is now at second floor slab and making rapid progress. Moving to RARE India. Integration work for the pilots is at final stages, and they are targeted to go live on the Autograph Collection by Marriott Bonvoy in this coming December. This gives RARE partners a global distribution they will benefit from. For SAMHI and RARE, it is a fee-led platform that needs very little capital and will start adding to our YoY revenue and EBITDA growth starting FY -- starting Q1 FY '28. The excitement of this platform is that with efforts to keep adding hotels to this platform each year, we create a strong layer of non-same-store growth without material capital expenditure. I will now hand over to Rajat for the finance.
Rajat Mehra (SAMHI Hotels Limited): for Q2 FY27 stood at 342.7 crores representing a year-on-year growth of 15.6%. Of the 45.6 increase in the asset income, 35.5 crores was contributed by the same-store growth. New and acquired assets contributed remaining 10.1 crores, led by the Trinity, Bengaluru, and the Holiday Inn Expresses at Greater Noida and Calcutta. Consolidated EBITDA increased by 12% year-on-year to 123.8 crores with an EBITDA margin of 36.1%. Excluding approximately Rs. 10 crores impact of the changes in the GST regulation, which was not present in the base quarter of Q2 FY26, comparable EBITDA would have been approximately Rs. 133.8 crores. This represents a year-on-year growth of 21.3% and a comparable EBITDA margin of approximately 39.1%. As the change in the GST regulation became effective in late September of 2025, the base quarter from Q3 FY26 onwards already reflects this impact. Beginning the next quarter, no GST-related adjustment will be required, as the reported EBITDA will converge with the comparable EBITDA. The finance costs declined by 10.3% year-on-year to Rs. 38.3 crores, reflecting lower interest costs and improved credit profile. The depreciation for the quarter stood at 32 crores. Profit before tax and exceptional item increased by 39.9% year-on-year to 53.4 crores. During the quarter, we also recognized an exceptional gain of 3.9 crores from the sale of non-core land parcel at Caspia. The tax expense was 16.2 crores, was largely deferred tax and non-cash in nature. Following the recognition of deferred tax asset in FY26, this asset is now being utilized as the company generates taxable profits. Please note that in Q4 FY26, we recognized deferred tax asset in our P&L. We expect similar recognition in Q4 FY27 as well, which will have a positive impact on our reporting numbers. PAT for the quarter stood at 41.1 crores, of which Rs. 33.5 crores was contributed, or attributed to SAMHI shareholder. The year-on-year decline in the reported PAT was entirely attributed, to the high base of Q2 FY26, which included exceptional gains of 84.1 crores arising from reversal of impairment on Navi Mumbai asset and sale of Caspia Delhi. Profit before tax and exceptional item for H1 FY27 increased by 35.4% to 86.2 crores, while the PAT stood at 66 crores. Excluding the one-time exceptionals in Q2 FY26, our PAT for Q2 FY27 grew by approximately 137%, which is more than double as against the same quarter last year. Turning to the balance sheet, the net debt stood at 1,458 crores as on September 2026, representing a reduction of Rs. 35 crores from June, despite continuous investment in our growth pipeline. Capital work-in-progress increased to 219 crores from 139 crores in March, primarily reflecting ongoing investment in W Hyderabad and the Westin in in Bangalore. Net debt to the trailing 12-month EBITDA stood at 3.1 times. After adjusting for capital deployed in the growth projects, the ratio was 2.2 times. Our credit rating remains strong at A+. Our effective interest rates is approximately 7.8%, which is around 300 basis point lower than at the time of our IPO. Following the recent increase in RBI's repo rate, we expect the overall cost of borrowing to increase gradually. Free cash from the quarter was approximately 83 crores after the cash interest payment of 35 crores. The cash and cash equivalent stood at 279 crores at the end of the quarter. With this, let me hand over to Ashish.
Ashish Jakhanwal (SAMHI Hotels Limited): Thank you, Rajat. I think we'll I'll pick up two points from Rajat's commentary. One is on net debt and the other is on the finance cost. On the net debt we have made
Ashish Jakhanwal (SAMHI Hotels Limited): our commitment to take it down to 2.5 times in the long-term. The direction that we see as of now makes us believe that we will get into at least a two handle either by the end of this fiscal year, or early next year. So, which will keep us ahead of our schedule to make sure that the balance sheet is at a stable state. The second important point is on financing cost. And I think we have always prepared the interest rate environment to remain slightly volatile, which means that we can never take comfort at a point of time. So, even if the repo rates go up, you know, let's say we've seen one round of increase, even if they continue to increase for next two more rounds, we see insignificant impact on our overall performance and earnings. Also because we have the ability to refinance. Most of our financing has no refinancing expenses. And the second is that we have the ability to use our free cash more efficiently, to effectively kind of control the overall absolute finance cost. So, while we are watching out for those particular areas, we're not really worried about the impact of that on our on our earnings for this year and for the next year. Let me now close with in the second half, I think we expect a good quarter three and quarter four, which would be the strongest quarters of the year. Bangalore, Hyderabad, Delhi have a heavy calendar of marquee events. In Bangalore, we have Aero India, BCC India Expo, AI India Expo, Digital Manufacturing Expo, and the and the CAHO Diagnosticon. In Hyderabad, we have events like BioAsia, Kisan Agri Show, India Pharma Expo, and in Delhi NCR, we have Bharat Mobility, Auto Expo, India Art Fair and Medical Fair, and we're just mentioning a few of the many events which are lined up in all the key cities. Now, these events will compress demand across our micro markets and compress nights are where our pricing power is greatest, as you saw with sold-out nights this quarter. Also, unlike previous year, where due to certain one-offs, we saw a dip in quarter four EBITDA over quarter three, we now expect expect each subsequent quarter to be stronger than the previous one. I'm also pleased to publish our first sustainability report this quarter, which sets the baseline against which we will hold ourselves to account. With that, we're happy to take your questions.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Karan Khanna from Ambit Capital. Please go ahead.
Karan Khanna (Ambit Capital): Yeah. Hi, Ashish. Hi, team. Thank you and a very happy Diwali to everybody. Three quick questions. First is on Sriperumbudur, which was earlier proposed to be an extension of Fairfield, but will now be a separate Marriott hotel. How does this change the overall CapEx plan for the asset, and also the RevPAR assumptions and yield on cost versus what was expected earlier? And second one, Ashish, you just spoke about the MICE calendar for 2H across Bangalore, Hyderabad, and Delhi, but any particular trends on, you know, rate to call out, especially during these exhibition dates? Are we looking at more like 20% plus RevPAR growth during these dates or months? Maybe you can answer this first and I'll ask my third question later.
Ashish Jakhanwal (SAMHI Hotels Limited): Okay, so I'll I'll take the MICE and the ARR first, Karan. So, we've so there was a, let's go from quarter one till now. You know, Karan, something interesting happened in quarter one. We, and we can talk about our portfolio, we closed the quarter at near 80% occupancy, but in quarter one, the rate was rather sluggish, you know, 2% growth or so. And our understanding is that it was largely because of the Gulf crisis, the booking window had collapsed. And with the collapse of the booking booking window, the revenue managers didn't have the confidence to price an asset in advance because they had not seen the business on books. We closed the quarter at 79%, 80%. In quarter two, we started seeing improvement in both booking windows. And I think a little bit of conviction about the fact that demand is there, it comes at the last moment. What's happening with events, Karan, is that we have visibility of demand far before the event, so to say. And therefore, that allows a better yielding of the asset. The second thing we've noticed in the last 2-3 months is on unaffected days, and an affected day for us is, I hate to say this, a a a holiday, a long weekend, or any sort of business
Ashish Jakhanwal (SAMHI Hotels Limited): destruction event, on a non-event day the hotels are sold out, and the yielding is very strong, and I would say the total revenue growth is, you know, 20-24% typically, right? But having said that, that does get normalized and moderated by the affected days, which could be long weekends, holidays, so on and so forth. So I think we've delivered a 15% revenue growth overall portfolio, about 12.5% growth on same-store. This would have been slightly higher, Karan, but for the fact that in one of our large hotels, and we did mention it on quarter four call, we had a very low rated catering business which has been stopped. So I would have expected another, I would say 50 basis points 100 basis points impact on that. Otherwise, the same-store growth is about 13.5% or so. And I think that is not at risk as we go into quarter three and quarter four. If we get some really sold-out dates, we can yield it in high teens. But at least I would think that is pretty secure. In terms of Sriperumbudur, it's actually very interesting. You know it's a 155-room hotel. We are already at high 20s return on capital employed in that hotel at a rate of Rs 8,500. With the addition of the Marriott instead of this adding Fairfield rooms first of all, we're adding about 134 rooms. We expect the CapEx to be in the zip code of about 160-odd crores plus-minus. And with that, we expect the total yield on cost to be in the zip code of approximately 17%. Yeah. About 15% to 17% largely because the existing hotel has already paid for the entire land cost, so there is really no land cost per se. It's a strong market. We have been the market leaders with the Fairfield for last several years, that Fairfield has been one of our most consistent performers including through the COVID period. So we do expect that the additional capital will be deployed at about between 15% to 17% return on capital employed in our
Karan Khanna (Ambit Capital): Sure, that is helpful Ashish. The last two questions, one is on RARE, you know, 1Q had 75 hotels with about 1,050 rooms, while 2Q mentions 70 hotels and 900 rooms, so is the reduction due to deliberate portfolio curation, or is it owner exits? And second one's on Mumbai, with MIDC issuing the CC for Navi Mumbai hotels, can you restate the timelines here for construction completion, and how are you thinking about the overall CapEx and RevPAR here, especially given the expected supply in the micro-market over next three to five years?
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