Brokerage firm Prabhudas Lilladher has maintained a 'Buy' rating on Samhi Hotels with a target price of Rs 201. While the firm expects 15% revenue growth through FY28, it has slightly lowered profit estimates due to short-term pricing pressures. Investors may track how the company balances its large expansion plans with debt management.
Brokerage firm Prabhudas Lilladher has maintained its 'Buy' recommendation for Samhi Hotels, keeping a target price of Rs 201. This outlook follows the company's recent performance in the first quarter of the 2027 financial year, where it showed steady operational growth despite challenges in the travel sector.
Operational Growth and Strategy
Samhi Hotels reported a 9.6% growth in comparable Revenue Per Available Room (RevPAR)—a key measure of hotel performance that tracks how much money a room generates on average. The company achieved this alongside an occupancy rate of 79.3%. The brokerage expects the company to see a 15% compound annual growth rate in revenue from fiscal year 2026 to 2028. This growth is expected to come from consistent performance in existing hotels and the addition of approximately 170 new rooms in Hyderabad. Furthermore, the company’s asset-light platform, RARE India, is contributing to this expansion strategy.
Factors Affecting Profit Estimates
Despite the positive outlook on revenue, Prabhudas Lilladher has lowered its EBITDA (operating profit) estimates by 3% for FY27 and 5% for FY28. This adjustment reflects concerns over short-term pressure on Average Room Rates (ARR), which is the price a hotel charges per room. This pressure stems partly from a lower number of high-paying international travelers and the loss of certain input tax credits. Investors should note that when hotels face difficulty keeping room rates high, it can put pressure on profit margins.
Financial Context and Risks
Samhi Hotels is currently trading at 12.3 times its estimated FY27 operating profit and 10.1 times its FY28 profit, based on the brokerage's calculations. While the outlook remains optimistic, there are risks for shareholders to consider. The company has significant capital spending plans, with approximately Rs 22,000 million projected over the next five years. Large spending projects always carry the risk of cost increases or delays. Additionally, geopolitical tensions, such as those in the Middle East, continue to affect international travel, which in turn impacts the rates that hotels can charge.
Debt management will be an important area for investors to monitor. While the company has taken steps to improve its balance sheet, the cost of servicing debt remains a factor in overall profitability. The future performance of the stock will likely depend on the company's ability to maintain high occupancy, manage its debt levels, and successfully execute its planned hotel additions without facing major cost overruns.