SAMHI Hotels Limited is a prominent branded hotel ownership and asset management platform in Bharat, with the third largest inventory of operational keys (owned and leased) in Bharat as of March 31, 2023. Within 12 years of starting the business operations, they have built a portfolio of 3,839 keys across 25 operating hotels in 12 of Bharat's key urban consumption centers, including Bengaluru (Karnataka), Hyderabad (Telangana), National Capital Region ('NCR'), Pune (Maharashtra), Chennai (Tamil Nadu) and Ahmedabad (Gujarat), as of March 31, 2023. Pursuant to the completion of the ACIC Acquisition (as defined below) on August 10, 2023, the portfolio has further increased to 4,801 keys across 31 operating hotels. Company has adopted an acquisition-led strategy to grow the business. They acquire or build primarily business hotels, and take steps to further upgrade properties and engage with established branded hotel operators to allow the hotels to be appropriately positioned within the market. Subsequent to this one-time upgrade of the property, they deploy the in-house and proprietary asset management tools and capabilities to further enhance the ongoing financial and operational performance of the property. Company's portfolio is diversified across key consumption centers in Bharat, at different price-points and with established brands catering to a broad set of demand. They currently categorize the hotel portfolio into three distinct hotel segments based on brand classification – Upper Upscale and Upscale, Upper Mid-scale and Mid-scale. Over 51.14% of the Total Income for the Financial Year 2023 was from Upper Mid-scale and Midscale hotels. The Upper Upscale and Upscale hotels, which contributed to 47.35% of the Total Income for the Financial Year 2023. Company's average number of keys grew by 5.8 times from the FY 2014 to the FY 2017, by 2.8 times from the FY 2017 to the FY 2020 and further grew by 1.2 times from the FY 2020 to the FY 2023 (after taking into account the keys acquired pursuant to the ACIC Acquisition). The hotels typically operate under long-term management contracts with established and well recognized global hotel operators such as Marriott, Hyatt and IHG. These engagements benefit the hotels by giving them access to strong operating processes, sales and distribution experience, larger clientele and loyalty programs of such hotel operators. Average occupancy rate for SAMHI Hotels for FY23, FY22 and FY21 is respectively 71.67%, 45.90% and 27.96% and for ACIC SPV Hotels is 73%, 48.25% and NA respectively. As per financial performance, SAMHI Hotels Limited has posted total income / net profits of Rs 179.25 Cr / Rs (477.79) Cr (FY21) and Rs 333.10 Cr / Rs (443.25) (FY22) and Rs 761.42 Cr / Rs (338.56) Cr (FY23). So as per previous financials data, company has shown good sales growth. Company has an average EPS of Rs (51.78)/-. Issue is priced at a P/BV of (1.11) as per NAV of Rs (113.07)/- as on 31.03.23. As company is making losses, so there is no point in calculating P/E ratio. As per RHP, peers comparison is shown in above table. On BRLM's front, two lead managers are associated with this IPO, and have handled around 65 IPOs in last three fiscals. JM Financial Limited : This is 33rd IPO from this BRLM. From last 10 IPOs, 3 opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, 1 is trading below issue price and remaining are trading above issue price or at par. (As on 07.09.2023) Kotak Mahindra Capital Company Limited : This is 34th IPO from this BRLM. From last 10 IPOs, 1 opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, all are trading above issue price or at par. (As on 07.09.2023) As per financials, SAMHI Hotels Limited has shown good sales growth, but company has made consistent losses. So, there is no point in calculating P/E. If we go with sales to market cap ratio, then it looks reasonably priced compared to other listed players. Also company is profitable at operating level. Company is in business of Hotels, which is highly fragmented and competitive segment. Performance of BRLM is good. As a sector, Hotel is not known for making big wealth. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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