Detailed Narrative
Robust FY26 Performance Despite Headwinds
SAMHI Hotels reported a strong FY26, with total income reaching INR 1,279 crores, marking a 12.3% year-on-year growth, surpassing its 9-11% guidance. Profit Before Tax (PBT) surged by 89% to INR 165 crores. This performance was achieved despite significant one-time📎 events, including geopolitical conflicts and severe monsoons, which diluted potential revenue by INR 45-52 crores from a potential 16-17% growth.
EBITDA and Margin Resilience Amidst Challenges
Consolidated EBITDA for FY26 stood at INR 463 crores, an 8.8% increase year-on-year, with an EBITDA margin of 36.2%. Adjusted for one-time📎 impacts like GST changes (INR 14 crores in H2 FY26) and FF&E upgrades (INR 5 crores), adjusted EBITDA growth would have been 19-20% with margins exceeding 38%. For Q4 FY26, EBITDA was INR 120 crores, a 6% decline YoY, primarily due to GST impact and pre-opening expenses, but management expects FY27 margins to stabilize around 38%.
Significant Deleveraging and Improved Capital Structure
The company successfully reduced its net debt to INR 1,450 crores by March 31, 2026, a reduction of INR 516 crores from FY25, bringing the net debt-to-EBITDA ratio to 3.07x, meeting its target of approximately 3x. Finance costs for FY26 sharply decreased to INR 171 crores from INR 225 crores in FY25. The effective interest rate is now 7.9%, and the company's credit rating was upgraded to A+ Stable by both CARE and ICRA.
Strategic Growth Pipeline and Capex Funding
SAMHI has committed INR 2,200 crores for capex from FY27 to FY31, with INR 250-270 crores planned for FY27. This includes INR 150 crores for the W Hyderabad, expected to open by FY27 end, and investments in Westin Bangalore. The company projects cumulative free cash flow of over INR 3,000 crores from FY27-FY31, which, along with the remaining INR 150 crores from the GIC platform, will fully fund this capex without incremental debt.
Asset Recycling for Enhanced ROCE
Over the past three years, SAMHI recycled INR 960 crores of capital, including INR 210 crores from monetizing non-core hotels and INR 750 crores from GIC infusion. This strategy involves selling assets like Caspia Delhi (sold for INR 65 crores, contributing INR 1.5-2 crores EBITDA) to redeploy capital into higher-ROCE opportunities. Management targets a 14-15% ROCE for its current asset pool and expects new projects like W Hyderabad to deliver double-digit ROCE.
Q1 FY27 Outlook and Market Dynamics
Management reported that QTD revenue growth for Q1 FY27 is tracking double-digits, with a flattish April followed by a strong May. They anticipate maintaining 10-11% Y-o-Y total revenue growth for FY27. The NCR market, particularly Hyatt Place Gurgaon, is expected to achieve mid-teens revenue growth in the current fiscal year following renovations. The company also noted an encouraging resumption of long-haul international travel.