YES Securities sees 40% upside in this hotel stock, initiates with 'Buy'

Analysts at Yes Securities said Samhi Hotels has a presence in key metro markets with upcoming capacity additions and a proven track record of asset turnaround

Samhi Hotels share price today: Domestic brokerage YES Securities has initiated coverage on Samhi Hotels with a 'Buy' rating, citing promising growth prospects and positioning it as a key beneficiary of the industry upcycle.

 

Analysts at YES Securities said Samhi has a presence in key metro markets with upcoming capacity additions and a proven track record of asset turnaround. The recent GIC investment unlocks further opportunities in the upscale and premium segments. A strong free cash flow (FCF) will help in generating a large investible surplus, fueling accelerated growth. Additionally, the company has a strong re-rating potential due to a significant valuation discount to peers.

 

However, on Friday, the stock was trading almost flat at ₹217.32, with a positive bias, on the NSE. On a year-to-date (YTD) basis, the stock has gained around 8 per cent. The stock's 52-week high was at ₹254.5 and 52-week low was at ₹254.5 on the NSE. The company's total market capitalisation stood at ₹4,807 crore. 

 

The brokerage projects a Revenue/Ebitda/PAT CAGR of 14 per cent/19 per cent/57 per cent over FY25-28E and assigns a June 2027 EV/Ebitda multiple of 15x to value SAMHI, arriving at a target price of ₹305. The target price implies a 40 per cent upside from Thursday's closing price of ₹217.19.  Ebitda stands for earnings before interest, tax, depreciation and amortisation.  

Here are the key reasons why YES Securities is bullish on Samhi Hotels:

The company has multi-brand tie-ups across segments, which offer flexibility to select prime locations within each micro-market. Around 85 per cent of its portfolio is concentrated in six key cities, with a strong presence in Bangalore, Pune, and Hyderabad. The portfolio is well-diversified across segments, with 23 per cent of keys in the Upscale & above category, 43 per cent in Upper-Midscale, and 35 per cent in Midscale. Its future pipeline remains focused on core markets like Bangalore, Hyderabad, and Chennai, aligning with its premium segment strategy.

 

"Samhi Hotels’ turnaround strategy depends on buying an asset at a discount to replacement cost. Discount to replacement cost ensures the ability to withstand tough times with a lower burden on the Balance Sheet. In addition, the company focuses on rebranding and renovation of acquired assets, which results in superior ADRs and occupancies," the brokerage said. 

 

Additionally, the company's effective capital allocation through asset recycling and improved operational performance over the past two years has notably improved balance sheet health.  

 

The recent ₹7.5 billion investment by GIC and the sale of Caspia, Delhi, are expected to bring Samhi’s Net Debt/Ebitda below 3x by FY26. Management also expects to generate an investible surplus of approximately ₹17.3 billion over FY26–30.