Got my hands on a report from Kotak, the revenue growth in FY2025 can be higher, as they have acquired additional ~950 keys and adjusted revenue for FY2024 was ~1050 crores. So my assumption is in FY2024 they may touch 125 crore to 150 crore in PAT, considering they will be saving 30 crores in ESOP expenses and the money they spent last year on integration of the additional ~950 rooms.

they won’t have to pay taxes for a long time as they had losses for the last few years.

and here is how I calculated ebitda

- Expecting 200 crores to be their interest cost. So 2000 crores is debt because cost of debt is 10%. Assuming 145 crores+200 crore free cash flow, ebitda coms to 470 crores(3.5 times net debt/ebitda is expected)

Out of this, 200 is interest costs, followed by almost the same or a little higher depreciation at 125 crores.

so we get, 135 crores. remove 30 crores because of G&A and ESOP costs, we get a pat 100-110 crores.

Hi Anshul… Thanx for pointing out on the taxation part… I have very limited knowledge on rules regarding corporate taxes… Can u please elaborate more on that? Thanx…

When a company operates in losses for some years, it doesn’t have to pay taxes for the subsequent profit years till the time they don’t cover their losses.

On a very conservative basis, I think they can do atleast 425cr of EBITDA (without accounting for any expansions and only assuming 10% RevPAR Growth

ACIC 950 rooms were already integrated in Sept 23 quarter. Dec 23 and Mar24 Q have the revenues from acic integration.

Samhi will only add 350 rooms in Q3 FY25.

Why ebitda would go from 2758 to 4470 in one year.

More like 3300 to 3700 it should be.

I see in the concall the guidance in revenue is 1000 crore of March 24 + 10%

This is in the transcript

"And on top of that if the market delivers another 10% revenue growth "

++ to add to above point on ebitda

last year ebitda is 275 crore

FY 25 would be

275 +

40 crore from esop saving +

4% * 275 = 11 crore from corporate g & a +

10% revenue growth might result in 14% ebitda growth = 275 * .14 = 38.5

Total = 275 + 40 = 315+11 = 326 + 38.5 = 366 crore roughly for FY 25

ev/ebitda multiple of 16 gives 6222 crore valuation

Which is very close to the current enterprise valuation

4200 + 2153 debt = 6353 crore

Okay i get it now.

Samhi has reported two ebitda for FY 24

275 is standalone

348 is consolidated pre esop. for FY 24. (including acic)

In the kotak securities analysis sheet shared above it mentioned 275 for fy 24

so i got confused.

I will redo the calculation with 348 ebitda for FY 24

For FY 25

FY 25 would be

348 +

4% * 348 = 13 crore from corporate g & a + same for esop

10% revenue growth might result in 14% ebitda growth = 348 * .14 = 48

348 + 13 + 13 + 48 = **422** crore ebitda for fy 25 with no tax

422 * 16 = 6752

current enterprise value is 6353.

Guidance for debt at fy 25 end is 3.5 debt/ebitda i.e 3.5 * 422 = 1470 ~ 1500 crore

So market cap can be = 6750 - 1500 = 5000 crore

i.e roughly 23 to 25% upside from current levels.

The Kotak report also uses the Mumbai land parcel as a basis for the target price. Given the uncertainty around reflecting in the PnL by a certain date, it’s best to ignore the target and arrive at a valuation independently, like you’ve done.

Any specific reason for giving 16x ev/ebitda multiple to samhi?

Currently it is trading at ev/ebitda multiple of 21x and Charlet at 35x and debt/ebitda of Samhi is 4x and for Charlet is 3x

in fy 25, Samhi should have ebitda 422 so the EV= 422*21 =8862

market cap can be = 8862- 1500 = 7362 crore

so 84% upside. If market plans to give even higher multiple (less likely) the price may appreciate more.

Thoughts?

I am taking the screener number of EBITDA for my ease, my calculations will apply to 348 as well. its for the purpose of assigning a EV/EBITDA multiple

Despite the fact that there are higher chances of rerating than derating because of continued strong performance, lets assume it stays 21x

Here is how I calculate it Moreover, they have guided for 200 crores of interest cost and the cost of debt is 10% so the debt should be around 2000 crores(more or less the same at current levels)

10% revenue growth is too harsh, ACIC portfolio will have good margins+ a margin expansion of 4%

and 300 rooms or so are being added to the portfolio in next few months. So according to the management, 100 crore of EBITDA will be added just from these two.

Moreover, REVPAR willl be in the low double digit numbers, lets be conservative and say 10%

This is operating leverage at play and it will straightaway fly to the EBITDA

So, 267+100+30= 400 crores.

a 21x multiple gives 8400 crores crores of EV/EBITDA. Reduce 2000 crores as Debt and you get an upside of 50% for the next year.

1)Why not comparing with its peers ,since big players are getting over 30x why samhi will get only 21x?

2)I read the history of other big players when they were in loss, during those period they are getting P/S of 4-5x where Samhi Hotel are currently valued at , once they turnaround they started valued at a P/S of over 10 , So if same things happens to Samhi as well and valued at P/S of 10 with the Sales of 1150(15%Growth) it should be traded at mcap of 11500 which is around 2.5x , so there should be upside of 150%.

I’m I missing something?

the nature of holders in Samhi are weak. Most of them are PE funds who hold significant stake in the company and they tend to exit after IPO. I think one just exited a while back. So there will always be a supply overhang and that is what’s restricting the movement of Samhi currently imo.

So because of this, I would want to consider a lower multiple(that doesn’t mean we won’t get rerating surprises )

Do check lemon tree and similar. Also the hospitals. I am no expert but I think this is normal in the industry. Unless you are old institution sitting on prime real estate assets, you require huge capital to scale.

Capital intensive sector with long gestation period requires multiple stakeholders to bear the risk.

Some of them happen to be PEs who want exit but I have seen some sitting on their holdings for years.

Management said they are targeting 3.5x Net debt/EBITDA by the end of FY25 and the Interest cost for FY25 will be 200cr as the interest rate is 9.8%, hence the net debt is 2000cr. Current cash balance is 260cr, assume the cash balance is same next year as well and the generate cash flow is being used to bring down the debt.

Net debt at the end of FY25 = 2000-260 = 1740cr

EBITDA = 1740/3.5 =497cr

Considering valauation of 21x EV/EBITDA: EV= 10440cr

Market cap = EV-debt = 10440-2000 = 8440cr

upside of 2x

Note: Samhi hotel is trading at the lowest valuation in its peer group. With improved balance sheet the valuation perhaps either remains same (21x) or increases, and less likely to decrease.

When management said Debt to ebitda they are referring to long term borrowing only which is 1560cr as of now.

Correct me if I’m wrong

folks also must factor in the accounting writebacks , that management has mentioned in the recent call , some impairment reversal coming in this year , some deferred tax benefits coming in next year , will only add to earnings momentum , and ADIA also buying in most blocks , some selling overhang needs to go for stock to head higher , valuations give comfort , but we just hope the industry doesent see any major shocks , mostly returns in this will come quick when price discovery starts , better to stay invested rather than time this one.