Samhi Hotels share price soars over 45% from its 52-week low. Time to buy this small-cap hotel stock?

Samhi Hotels share price has experienced a significant surge over the past two weeks, rising nearly 20% during this period. The hotel stock has climbed more than 45% from its 52-week low, raising questions about whether the rally in this small-cap company is sustainable. 

Analysts have a positive outlook on Samhi Hotels stock, with brokerage firm PhillipCapital India initiating coverage with a 'Buy' rating, while setting a target price of ₹243, suggesting a possible growth of 38% from current levels. 

According to the report, the domestic brokerage is optimistic about the company due to the stability offered by corporate travellers, collaborations with leading global brands, demonstrated expertise in turnaround strategies, and improvements in key metrics.

PhillipCapital India explained that Samhi has strategically invested in major office markets such as Bangalore, Hyderabad, Pune, and Delhi NCR, which experience high demand. This strategy mitigates the cyclicality commonly observed in the leisure sector. Furthermore, over the years, the management has refined its approach to identifying undervalued or distressed assets and enhancing them to their true inherent worth.

The company’s exposure to the upper upscale and upscale segments is projected to grow from 22% of key inventory in FY24 to 27% in FY27. This upward shift is expected to lead to increased income from assets and an enhancement in operating margins by 600-1000 basis points for the same hotel.

Moreover, the report indicates that the firm has experienced a rise in operating margin from 28% in FY24 to 35% in 9MFY25, attributed to a decrease in ESOP costs and enhanced margins in the ACIC portfolio. Additional margin growth is anticipated as the ESOP costs continue to decline and the margins in ACIC stabilise. The current Net Debt to EBITDA ratio stands at 4.9x, however, with a notable increase in operating profit, we forecast this will drop to 3.1x by FY27.

Outlook and view

"Samhi is the largest multi brand hotel operator in India with 4,823 keys across 31 hotels in 13 major cities (post sale of Four Points by Sheraton in Chennai in February 2025). Through strong institutional backing they have mastered the acquisition and turn around model approach in large office markets where a significant mismatch in demand and supply exists.

They currently operate at an occupancy level of 74% as on 9MFY25 and we are expecting this to increase to ~75% by FY27. We are expecting an increase of 10.4% in ARR and 11.4% in RevPAR over the next three years. We expect a CAGR growth of 8.9% / 11.9% / 58.9% in Net Sales / EBITDA / PAT respectively for the period between FY25E-27E. We initiate coverage with a Target Price of ₹243/- with a potential upside of 37.8%," said PhillipCapital India in its report.

Technical Outlook

Samhi Hotels share price slumped 3% today. The stock opened at ₹182.05 apiece on the BSE, and touched an intraday high of ₹182.75 apiece and an intraday low of ₹176.10 per share.

Anshul Jain, Head of Research at Lakshmishree Investment and Securities, explained that after this sharp move, a brief consolidation and moving average catch-up are likely for the next 1–2 weeks. “Once the base builds, the next leg of the rally towards ₹225 looks highly probable. Traders should keep it on radar for a post-consolidation breakout,” Jain said.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.