Welcome to SAMHI Hotels Limited, Q4 FY25 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listening-only mode, and there will be an option for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing * then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Jakhanwala, MD and CEO of SAMHI Hotels Limited. Thank you, and over to you, sir.
Thank you. Good morning, ladies and gentlemen. Welcome to SAMHI Hotels' earnings call for the quarter ending March 31, 2025. I have with me today Gyanadas, who is EVP and Head of Investments; Rajat, who is CFO; and Nakul, who is VP of Investments. We also have on call our investor relation advisors, Strategic Growth Advisors. We have uploaded our quarter-four FY25 financials and presentations on the exchanges, and I hope everybody had an opportunity to go through the same. To begin with, I would give you all a quick recap of financial year 2025 and what all we've achieved thus far. This will also set the base for our future endeavors as we look at financial year 2026 and beyond. We'll then have Rajat give a quick snapshot of our quarter-four FY25 and full year FY25 financials, following which we will open the floor for Q&A.
Financial year 2025 has truly been a transformational year for SAMHI, as it is our first full financial year post our IPO in September 2023. Our portfolio, led by markets in Bangalore, Hyderabad, Pune, and NCR, continues to drive strong growth in both top line and bottom line. Our same-store assets delivered a 16.5% year-on-year RevPAR growth, which led to our group-level revenue increasing by 17.5% year-on-year to INR 1,150 crore. Flow-throughs and margins remain healthy, and EBITDA pre-non-cash ESOP was at INR 443 crore for the full year, which sets the base for strong same-store growth going forward. From a growth perspective, we have made two very strong acquisitions this year, which complement our current portfolio and will augment our same-store growth over the next few years. First, as you know, is the acquisition of the operating 142-room Trinity Hotel in Whitefield, Bangalore.
We are in advanced stages of design and development of this asset, which will be converted into a 362-room Westin and Tribute Portfolio, dual-branded hotels. On current average rates, we expect this hotel to operate at about INR 5 million-INR 5.5 million per revenue range, so we are looking at an additional INR 1.8 billion-INR 2 billion of revenue from this asset on FY2025 average room rate basis. Next is a long-term variable lease we have signed in Hitech City, Hyderabad, for the conversion of an office building to a 170-room hotel to be managed under Marriott W Brand. Development has already started, and we expect the hotel to open in the second half of FY2027.
We believe that the strength of the market, a very strong and recognizable brand, and the product shall position the hotel towards the top of the comp set, with revenues per key upwards of INR 6 million, which will add another INR 1 billion of total revenue on an FY2025 room basis for this hotel. In addition to the above, we have 300 odd new rooms within the Holiday Inn Express portfolio in Kolkata, Rithima, and Whitefield, Bangalore, which are now operational. Add to that the 54 new rooms in Sheraton, Hyderabad, and 22 rooms in Hyphen, Pune. You will start seeing incremental revenues coming from this new inventory in FY2026, adding to our same-store growth. Next is a milestone strategic partnership we have established with GIC, Singapore's Sovereign Wealth Fund. GIC brings unparalleled institutional capabilities for us to benefit from.
In addition to committing INR 750 crore of capital, of which INR 580 crore have been received as of May 27, this partnership has multiple benefits for SAMHI. It strengthens our balance sheet by taking our net debt to EBITDA down to 3.2 times on a FY2025 basis, thus unlocking substantial pre-cash flow generation going forward. It provides us INR 150 crore of CapEx funding for the Westin Tribute portfolio Whitefield development, where there is about INR 375 crore of pending CapEx. It gives us access to a marquee institutional investor and capital partner in GIC to accelerate our growth. With a strong balance sheet and significant freeing up of cash from operations post the debt reduction, we're now focused on growing our platform using our time-tested acquisition and conversion strategy, but also increasing through long-term variable leases. We have visibility of an actionable pipeline in our core markets.
We are also very pleased to inform you that this was our first full year of profit, obviously after we've gone public. With this, now I'll request Rajat to give us a summary of our financial performance for the quarter and the full year, and over to you, Rajat.
Thank you, Ashish. Good morning, everybody. It gives me immense pleasure to announce SAMHI's financial performance for the quarter ending March 31, 2025. On same-store assets, we have recorded a healthy 15.8% year-on-year growth in top line for the quarter, resulting in an EBITDA growth of 22%. Complementing this is the ACIC portfolio, which now has crossed the 40% milestone after multiple cost intervention steps taken over in the last 18 months since the acquisition. We will now truly unlock the value of the ACIC portfolio in FY2026 and FY2027 once the revenue management of Marriott kicks in, and we convert the Pune and Jaipur assets to Courtyard by Marriott and Tribute Portfolio, respectively. The net result of this is a consolidated income of INR 324 crore for the quarter ending March 31, 2025, representing a year-on-year growth of 12%.
Consolidated EBITDA for the quarter stood at INR 131 crore, with a year-on-year growth of 21%. After accounting for a non-cash ESOP expense of INR 4.4 crore, our reported consolidated EBITDA for the quarter stood at INR 126 crore, delivering a 31% year-on-year growth. The PBT for the quarter stood at INR 42 crore, and accounting for exceptional items, the PAT is INR 46 crore. I'm also happy to report that on a full year basis, we have reported a top line of INR 1,150 crore in the financial year 2025, delivering a growth of 18% year-on-year basis. Consolidated EBITDA pre-ESOP stood at INR 443 crore, growing at 27% on a year-on-year basis, which gives us a strong base to deliver future growth. ESOP cost stood at INR 18 crore for the year, which will reduce to INR 10 crore in FY26 and will stabilize at that level. Depreciation amortization expense are largely stable at INR 117 crore.
Our overall finance cost stood at INR 229 crore, which includes INR 30 crore of non-cash expenses relating to amortization of processing fees, interest on lease liability, and other non-cash in their accounting entries. Accounting for ESOP cost, depreciation, and finance expenses, we have reported a profit before tax PBT of INR 80 crore. Further accounting for exceptional items, as mentioned, our reported profit after tax was INR 86 crore for the full financial year. From a capital structure perspective, our net debt as on March 31, 2025, stood at INR 1,967 crore, with a weighted average cost of debt of 9.2%, with a 20 basis point reduction in our cost from the previous quarter. With GIC capital infusion, our net debt is now around INR 1,430 crore, taking our net debt down to 3.2 times, thus materially strengthening our balance sheet.
After adjusting for the INR 250 crore of capital allocated towards growth projects such as Trinity Whitefield, which has negligible EBITDA contribution in our financials at the current stage, our net debt to EBITDA for our operating assets stood at 2.7x. The growth in EBITDA of our same-store assets, coupled with the unlocking of value in our balance sheet post the GIC transition, will lead to strong cash flows generation for the funding of the CapEx commitment that we have in the future and further accelerate our growth through technical merger and acquisition opportunities and long-term leases. With this, now I open the floor for questions. Thank you.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press * and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press * and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue settles. Participants, you may press * and one to ask a question. The first question is from the line of Karan Kannan from Ambit Capital. Please go ahead. Karan, may I request you to unmute your line and proceed with your question, please?
Hello. Am I audible?
Yes.
Hello.
Yes, Karan.
Hello. Am I audible? Yeah. Ashish, the first question, if I look at slides 22 through 24 of your presentation, what I can see is that the occupancies for upper mid-scale and the mid-scale hotels seem to be peaking out. You've seen a downward trend in your mid-scale occupancies, while even in case of upper mid-scale, it seems to be stable quarter on quarter and year on year. Is that a trend that you're seeing where supply seems to have caught up on the mid-scale side because of which occupancies have been peaking out, or is it your conscious strategy to focus more on the RevPARs rather than the occupancies in the segment?
Karan, the strong RevPAR growth is a clear demonstration of the fact that there is no supply pressure on the performance. I think every operator and owner understands that a revenue driven by rate is more profitable than a revenue driven by just volumes. This is a classic revenue management, lead management play with absolutely no stress from supply, and therefore the RevPAR performance continues to be very strong, driven by average rate.
Yeah. If the product looked at your RevPAR and your overall portfolio, this is a 18% running well.
You are losing your audio.
Hello? Is this better?
Yeah.
Hello?
I hope this is better.
Yeah, Karan, go ahead with your question.
Yeah. I think the second question, Ashish, was if you look at the RevPAR and your overall portfolio, this was up 18% while, well, the revenues are up just 14%. Could you sense a light on the difference? As a follow-up, I think in the previous calls, you've spoken about ramping up the SMB offerings. How is that progressing?
Yes. Karan, we are seeing a stronger growth in room revenues, largely driven by demand-supply, airlines, office. That is why you would see in our portfolio, at least the RevPARs continuing to remain ahead of total revenue growth. That is number one. In terms of food and beverage, the steps have been taken, but they will start showing results towards, I would say, H2 of FY2026, things like the renovation of the ballroom in Sheraton Hyderabad, improvement of the ballroom in Hyatt Pune, some of the F&B initiatives we are taking for our upscale hotels. All of those efforts are underway with an intent that we should start seeing an equal contribution from food and beverage growth as we are seeing in room revenue growth.
I think we have seen some reverse, some provisions for employees, and I think for the W Mumbai line litigation. Could you share if that is the case, and are you expecting any developments at the year time soon, or does it pertain into some, I think, claims from the sellers along the line?
Yeah. We had made provisions in quarter three of FY 2024. As of today, of course, we had written off the value of that asset completely. We have fairly constructive dialogue going on with MIDC, which is the relevant authority, Karan. As a team, based on those conversations, we feel fairly confident that over the next quarter or two, we would get a written confirmation from MIDC, which will then allow us to write back that value of the asset into our books.
Sure. My last question for the ACIC portfolio, while the margins seem to be converging well, which is very encouraging, the RevPARs seem to be lagging compared to the same-store portfolio. Could you share what was the RevPAR growth for the ACIC portfolio in Q1 and FY2025, and your expectation is going to remain the same?
What we are expecting is, Karan, that in ACIC, we need to remember that we have the Four Points in Pune and the Four Points in Jaipur, which are being prepped for renovation and rebranding. Obviously, and these are large hotels. Pune is one of the second largest hotels in the ACIC portfolio after Hyderabad. Of these hotels that are not due for rebranding, let's say Hyderabad and all, we have seen pretty impressive year-on-year revenue growth starting quarter four, actually. Prior to that, because it was self-managed, the focus was on cost management. Post Marriott taking over the portfolio, we've seen encouraging revenue growth, but we need to be mindful of the fact that there are two hotels in ACIC which will have a deferred income growth on account of the pending renovation. 13% for the three assets which are not due for renovation.
We've seen in quarter four total revenue growth of 13%, RevPAR growth of 13%, but the two other assets are due for renovation, so there you'll see flattish trends.
Sure. Yes, Ashish. Thank you and all the best.
Thanks, Karan.
Thank you. Next question is from JInesh Joshi from PL Capital. Please go ahead.
Yeah. Thanks for the opportunity. My question is on the sale of the Chennai hotel. I think when we did this transaction a couple of months back, the sale price was approximately INR 53 crore. However, in the result press release, we have stated that the sale price is approximately INR 3 crore, and we have recorded some exceptional loss on that exit. If you can just explain this part a bit better. Also, a related follow-up is that given we have an asset recycling plan in place, and we may choose to exit certain non-performing assets in future as well, is there a possibility that you might see such losses come through in future whenever we plan to basically exit?
Jinesh, just two clarifications. The sale price is INR 53 crore. I do not know what
There was a debt in that particular asset, just about INR 50-odd crore. Net proceeds, what we got?
Yeah, INR 53 crore is the net proceeds post settling the leverage on that asset, but the sale price was INR 53 crore. That is point one. Point two, this was an asset acquired through the ACIC portfolio, where at the time of the acquisition, we had to create certain goodwill. What we have basically done is written off the goodwill, Jinesh. Otherwise, we have sold the asset at a fair value. Answering your question about subsequent assets, there are very few assets where we have this issue of, I would say, material goodwill on top of the asset value. The assets that we are currently reviewing for asset recycling, none of those assets have any such issue.
We do not expect any such accounting adjustments to come for this future asset.
It will be positive.
Yeah. Actually, some of those assets, based on the current discussions, will end up leading to profit rather than any accounting losses.
Understood. Sir, in response to the previous participant's question, you mentioned that given you are expecting a favorable verdict from MIDC, there could be some write-back also which could come through, as you saw in this quarter. Can you just share what was the total written down amount and how much of it can be expected to be written back?
Jinesh, we actually took a total hit of INR 76 crore in our December quarter financial in FY 2024. When we get the favorable order, the entire amount will actually be reversed. There cannot be any partial reversal. It is a very binary situation. Once the order is there in our hand, which will be favorable, since our discussions as of now, there will be a complete reversal of INR 76 crore in our balance sheet and the P&L.
Sure. This reversal that happened in this quarter, it pertains to this only, right? This asset only?
It pertains to some other properties. The INR 76 crore of reversal still has not been taken into consideration. As we speak, we have close to about INR 138 crore worth of impairment that we have still not reversed. That's an opportunity which is available for us in the future, which includes the INR 76 crore that you're talking about.
Jinesh, the number that has come in this current quarter is not for the Navi Mumbai. It's certain impairment provisions we had created during COVID times, right? Some of that, I think, reversed as we've seen consistently strong performance through the last several quarters, right? In addition to what has been taken in the current quarter, as Rajat clarified, there is approximately INR 138 crore of potential impairment reversals, and INR 76 crore is a part of that INR 138 crore.
Even if that Navi Mumbai does not come, you're potentially still talking about INR 50-60 crores of impairment reversals to happen over the course of the next few quarters.
Maybe at the end of the year.
End of the year, actually. Sorry. Impairment actually will be done at the end of the year.
Understood. Thank you so much, sir, and all the best.
Thank you, Jinesh.
Thank you. Next question is from the line of Murtuza from Kotak Securities. Please go ahead.
Yeah. Hi, Ashish. Just a question. If I look at my quarter four asset income, that's grown by about 14%. Since your RevPAR growth is closer to about 20%, how do we reconcile the two? Is there any—I would have typically expected? Is it that the other revenues are growing at a slower pace, or what should be the inbuilt—if I were to look at quarter four asset income versus quarter four FY2025 asset income, what should be the implicit sort of room rental growth against that 14% overall revenue growth? I don't know if your exam sense—maybe I'm coming from out here.
Yeah. Murtuza, thank you for asking that. Let me clarify to the benefit to all. As you rightly said, if you look at the same store for quarter four, the total RevPAR growth was about 20%. If you look at page number 20, sorry, page number 16, where we've given the bridge for quarter four, the same store revenue growth was about 16%. There is this 4% drag because of the F&B and other income during the quarter, where the total RevPAR growth is higher than the total revenue growth. A large part of that, Murtuza, is really to do with, if you ask me, what's happening in the food and beverage, where we are seeing fairly muted growth year-on-year. As I mentioned earlier in response to Karan's question, actually, F&B growth is about 6.6% year-on-year, Murtuza, to be precise, right?
For the fourth quarter.
Yeah, for the relevant quarter, the quarter four.
Okay. Yeah. Okay.
That is a drag. However, as we've explained earlier, two of our big ballrooms, the one in Hyphen C and the other one in the Sheraton Hyderabad, are now under planning for renovation. You would see in H2, because of that work being completed, the dilutive effect of food and beverage on total revenue will start to taper off.
Okay. So we should move again to the overall RevPAR growth more or less reflecting in the revenue growth number? Because the F&B, which was a bit of a drag.
Yeah. Murtuza, we need to be mindful of the fact that RevPAR growth, I would call that in our portfolio to remain slightly ahead of the total revenue growth because we do not expect or underwrite the F&B to grow at the same momentum as we can expect rooms to grow. I mean, in markets like Bangalore and Hyderabad, which are big markets for us, the demand-supply imbalance for guest rooms is leading to a, I mean, just to put things in context, Murtuza, in a market like Bangalore, in quarter four, we saw a total RevPAR growth of 40% year-on-year. Now, when you see rooms growth being so bullish, it will be difficult for F&B to catch up, honestly, right?
I think we should set our expectations for RevPAR growth to remain slightly higher than the total revenue, but 6.6% is also not the right number for F&B growth. The F&B growth should grow in double digits, right, so that the dilutive effect is not so large.
Fair enough. Thanks so much, Ashish.
Thanks, Murtuza.
Thank you. Next question is from the line of Pradyumna Choudhary from JM Financial. Please go ahead.
Yeah. Hi. Congrats on a good set of numbers. I just had one question. What was the buy-by growth in Q4 for the ACIC portfolio?
Just give us a second. The total growth was 10%. Okay, so I give you overall, and then for the three assets which are not under renovation. The three assets which are not under renovation, the year-by-year growth was 12.9% RevPAR, and 6% was total revenue growth. 11% was EBITDA growth. Those are the three numbers. If we add the Jaipur and Pune assets which are now due for renovation, which is where the total income growth becomes flattish, actually, it's just about 3.6%, but the EBITDA growth is still 8.2%.
Okay. So if we add Jaipur asset, then the total revenue growth is getting flattened. So basically, there's been a degrowth in the Jaipur asset, is it right?
No, in both Pune and Jaipur, if you take them together, there is still a growth of about 3.6%. It's flat, about 0.5%. EBITDA growth is about 4%.
Understood. When are we expecting these two assets to be converted?
The work on Pune has actually started. We are in the process of completing the mock-up rooms. Through this year, we'll continue with the renovation. As you know, we are not shutting down the hotel for renovation. Therefore, we do not want to lose the existing revenue and profits we are getting from that hotel, right? The mock-up rooms are underway, should be ready in the next month and a half or so. Immediately after that, the work will start. We expect that by the same time next year, we would have the hotel fully renovated and rebranded to a Courtyard venue here.
All right. What about the Jaipur one?
Jaipur will start same time next year because we want to do the full renovation in the so unlike Pune, Jaipur has high seasonality. We see a significant difference in the revenues in H2 and H1 in Jaipur market, largely because it's got a lot of inbound. The Jaipur renovation will really happen between, I would say, April 2026 and I would say around August of 2026.
Okay. We just want to ensure that for H2, it's available basically. H2 is set right for them.
Pradyumna, you booked 80% of your profits in that hotel in H2, really. You want to make sure that you will not lose much in H1. Actually, because of the renovation and rebranding, you will recover more than enough for whatever you lose in H1 in H2 with the revised brand.
Right now, there's no work going on, right, in Jaipur? Why is Jaipur not really going in line with the overall industry?
No. Jaipur, because it needs a renovation and rebranding for them, until that time, we do not improve the product. We really do not expect it to be held in operation. Otherwise, there is nothing for us in terms of product to be able to push it in comparison to the competition.
Understood. Understood. Thank you and all the best.
Thank you.
Thank you. Next question is from the line of Vaibhav Muley from YES SECURITIES. Please go ahead.
Hi, Ashish. Congratulations on a strong set of numbers. First question, on the Bangalore market, you said you saw a total RevPAR growth of 40% year-on-year, which is actually very fabulous but significantly higher than your peer set, which is operating in the similar location as yours. I just wanted to understand the reason of such strong RevPAR growth for Bangalore market.
So Vaibhav, I always therefore caution us from generalizing anything, including market performances. I mean, today, Bangalore is a very large hotel market. It has very defined precincts and micro-markets which do not always necessarily behave in sync, right? We benefit from two of our hotels, which is a one-single hotel complex, Courtyard, JP, Bangalore, situated on Outer Ring Road, Bangalore. That stretch of road has seen, to the best of our knowledge, the strongest of absorption and therefore performance growth also. It is a very micro-market-driven outcome. Therefore, there could be some discrepancy, so to say, between us and the broader Bangalore peer set. Yeah, in our hotel, for the quarter—I mean, for our portfolio in Bangalore, we saw 40% year-over-year for the quarter. For the entire year also, it was 22.8%, actually. It was not a one quarter wonder.
For the whole fiscal year 2025, we saw the RevPAR for the city move from INR 5,120 to INR 6,290, which is a growth of about 22.8%.
Correct. Now we are opening Holiday Inn Express in Whitefield, Bangalore only, which is under pre-opening. So do you expect similar RevPAR trend for this property as well?
Yeah. What will also happen is that while the inventory is small, Vehbha, with 56 rooms, and our Bangalore inventory pool is pretty large, actually. If you see the Holiday Inn Express, the current product is 14 sq m and has been doing really well. It has about 160-odd rooms. The 56-room addition is actually 17 sq m, and they are being positioned at a higher category. Actual RevPAR realization for the incremental inventory would be substantially higher than from the existing inventory in that hotel. We do expect that to obviously also have a positive impact. Generally, during the current year, we have seen North Bangalore, where we have a Fairfield by Marriott and a Holiday Inn Express, do extremely well, Rajajinagar and Tumkur Road. Outer Ring Road, the Courtyard and Fairfield continue to do really well. In Whitefield, we have two hotels operational.
One is the Trinity that we acquired recently. All three hotels are actually doing reasonably well. We continue to expect seeing good performance from this market.
Okay. So you don't expect any sort of moderation in ARR in the coming year?
To be blunt, we have not underwritten such RevPAR growth rates. So we only feel really happy. If you're referring to 40% and 22%, then I will always say moderate your expectations. But I think this market will continue to deliver good double-digit RevPAR growth.
Okay. Great. Just last bit on the renovation side, you said you are renovating two ballrooms. What is the renovation expense for these two and any other renovation planned in the current year? What is the total R&M expense related to that?
Okay. Let me take you through, there's a fair bit happening at Bridge. Good that you asked that question. In terms of total planned activities, we would have the opening of the additional rooms in Sheraton Hyderabad and Hyphen C, Pune. The work is going on. We expect them to be operational at least starting of H2, plus or minus a month, depending on final consent that we would require. We then would also be renovating, as I mentioned, the Sheraton ballroom and the ballroom in Hyphen C, Pune, in addition to the additional rooms there. The ballroom renovation actually is a low CapEx. It is about INR 5 crore between the two renovations. The room inventory, of course, we've given the numbers earlier in terms of what the renovation budget would be. This is a majority of the renovations planned.
Of course, the work that we start for converting Four Points into Courtyard Pune, that would start getting incurred during the current year. Overall, we do expect about INR 175-200 crore of capital expenditure during the fiscal year FY2026, of which INR 50 crore will be contributed by GIC in the specific Bangalore asset and about, let's say, INR 125-odd crore would be spent by us from our own cash flows.
Understood. Post-renovation for these two ballrooms, do you expect better rates or do you expect occupancy increments? Where is it currently lacking?
I will allude to Murtuza's questions earlier about why total income is 15.5% when RevPAR is growing at 20% or 21%. The result is that the total F&B growth is around 6.5%-7%. Now, if you look at our portfolio, majority of our F&B income actually comes from our upscale portfolio. These two hotels are a large contributor to the upscale portfolio. As we get the better penetration usage of these two large ballrooms into big hotels, what we expect to do is see a higher growth in F&B income on a year-on-year basis, which means that if my RevPARs are growing at 20%, I expect my revenues to not grow at just 15% but 16%-18%. As I mentioned, I always expect total revenue to remain short of RevPAR growth in markets like India because the room demand is really, really strong.
The 5 percentage point deluge of effect that we saw last quarter, we should narrow it down to maybe 2.5 percentage points, really.
Understood. And just one last bit on the brand upgradation. So can you expect the delta in terms of % ARR improvement that you expect for conversion to Courtyard, Fairfield, and Tribute Nakul for all three respective categories?
Yeah. I think our big opportunity is right now in Four Points to Courtyard and Four Points to Tribute. In Four Points, Pune to Courtyard, our expectation, as you stated earlier, is about 20%-25% total revenue growth. In Jaipur, actually, because the asset is grossly underperforming, and there is a combination of both really bad product and also the brand that we're trying to bring in stronger, there we expect the total revenue and RevPAR growth to be upwards of 30% change. We see this sort of change in both the markets.
Will this be estimated or t hese markets?
I think, sorry, I would like to take your attention to the data on airline growth. If you see markets like Hyderabad, Bangalore have grown between 12% to 16.5% year-on-year change in passenger traffic. That is a good indicator for what is happening to hotel rooms also in these markets.
Thank you. Vaibhav, I'll request you to come back for a follow-up question, please. Next question is from Bharat Sheth from Quest Investment Advisors. Please go ahead.
Hi. Thanks for the opportunity and congratulations, Ashish and team. Ashish, as you alluded, hello. Am I audible?
Yeah. Yeah, Bharat. We can hear you loud and clear.
Yeah. Ashish, as you alluded that for the company, growth will not be in line with the RevPAR because of lower growth in F&B. In that case, how do we think about the impact on the EBITDA margin really can play out if you can give some color room? I mean, our EBITDA margin for our room as well as F&B and then overall impact?
Bharat, fantastic question. Let me tell you, whenever you see a total revenue growth driven by room revenue, you do expect the margins to expand significantly, right? Because F&B tends to produce higher contribution margin as compared to room, as compared to food and beverage, sorry. Rooms produce higher contribution margin as compared to food and beverage. My apologies. If you see overall margin profile, if you look at quarter four, which is really slide number 18, you would realize that our asset-level EBITDA had reached about 43% for the quarter. After accounting for net corporate G&A, about 40.5%. We expect this to be a trend we should see on an annualized basis going forward.
Our expectation and endeavor is that not just for quarter four, which we all know and expect is a strong quarter, we should see this margin profile remain applicable for all of SAMHI for the full year period. We do expect to get there, I would think, in the next four to six quarters so that the whole company is reporting these sorts of margins, not just for a quarter but for the whole year.
Great. What are kind of the margin we should look for for F&B?
If you look at uniform system of hotel accounting, which is the only way to articulate departmental profit, in a USHA format, you would see rooms division producing about 60-odd % contribution margin. F&B would be between 40-45%, right? The big gap there is that HLP is accounted for below. Unfortunately, it's not a true reflection of the margins because we all know food and beverage is energy guzzlers. Accounting for utilities expenses, which under uniform system of hotel accounting are actually below departmental profit, we would think the F&B margins are not more than 35%, really. There is a big gap between what margins rooms can produce and more so in a high capacity utilization, high rate environment related to what food and beverage can produce.
We love the fact that our business is driven by very predictable, sustainable, repeatable rooms business. We just want to make sure that any drag which F&B brings to RevPAR to total revenue can minimize that drag in the times to come.
Thank you. Bharat, I'll request you to come back for a follow-up question. A kind request to all the participants. Kindly restrict to two questions per participant. Next question is from line of Pranav Shrimal from PINC Wealth Advisory. Please go ahead.
Yeah. Hi. I hope I'm audible, sir.
Yes, sir. You are.
Yeah. Congrats on the numbers, sir. Just a couple of questions from my side. Firstly, are we still seeing any supply-demand mismatch going forward in our main areas of Bangalore and Hyderabad?
Bangalore, Hyderabad, Pune, NCR, which are four markets where probably we get 75% of our total revenues, right? We are seeing negligible. Bangalore is still seeing some supply, but thankfully the market size is so large that on a relative basis, the supply growth is just about 4-5% against airline growth of 11.5-12%, office growth of about 8-9%. We are seeing demand remain 2X of supply growth in Bangalore. In Hyderabad, Pune, and NCR, we actually just are not able to see any supply. We actually expect Hyderabad to grow fairly rapidly. Interestingly, for the same segment of hotels, Hyderabad is still selling rooms at a reasonable discount to Bangalore. It is our expectation that over the next few quarters, we would see that gap narrow down, if not be completely the same, actually, rates for the same set of hotels.
We are not seeing any reasons to worry about supply set. One of the good things about the sector is that because supply needs a hard asset to be built, it is not something that will be surprised by next year. We think we have a clear runway over the next at least three years before we start worrying about supply having any meaningful impact. I would caution you, my optimism is extremely myopic about the markets we are present in and the markets that we are investing our capital in. It should not be applied to all markets and all cities. Some of the tier two, tier three, we may see some higher supply growth related to the tier one market. Your question was about our market. We remain fairly upbeat about what we are seeing on demand and supply.
Okay. Got it, sir. And coming to Hyatt Regency and Sheraton, and our PPTs have said that they'll complete by this FY. Is there any quarter target that they have set to be opened by Q2 and not over the FY?
Yeah. Quarter three is when we expect this inventory to be operational for both these hotels.
Right. So we can sort of estimate that H2, these two inventories will be contributing?
Yeah, it will be.
Got it. Got it, sir. That is it from my side, sir. Thank you so much and best of luck, sir.
Thank you so much.
Thank you. Next question is from Nirvana Laha from Badrinath Holdings. Please go ahead.
Hi. Thanks so much for the opportunity. I have two questions. The first question is, if I look at the H2 revenue growth for the company when ACIC has been in the base, it's been about 12%. Going forward for FY 2026, do you think that's a fair rate of growth that we can look forward to? Also, if you can give the ACIC revenue and EBITDA for FY 2025 and FY 2024, please.
Okay. In terms of total revenue growth, Nirvana, I think we've always maintained that for same-store hotels. I think we'd like to repeat ourselves several times that when we look at KPIs and revenue growth, it's important to look at the same set of hotels because the moment you add new openings, it just infuses a trend, right? For the same set of hotels, we expect the total revenue growth to remain in the early double digits, right? We've been saying it for the last several quarters, but the market has been supporting a higher growth. We maintain that for a sustainable long-term growth for the same set of hotels, it should be a total revenue growth of early double digits, right? In terms of actual absolute, you would see about INR 190 crore revenue from ACIC for both years. Actually, 2024 was INR 192.2 crore.
2025 is INR 190 crore. This is for all the five hotels put together.
Okay. In terms of EBITDA, please, for the two years?
EBITDA was INR 66.8 crore in FY 2024. It is INR 74.2 crore now.
Okay. Okay. Thanks. Coming to a question on, I think in the press release, I'm forgetting which document, I think you have indicated that interest cost, your projection is INR 140 crore for next year. Then there are some non-interest finance costs, etc., which I think this year was close to INR 30 crore. You should confirm that. I'm just trying to understand next year as we grow in early double digit and the EBITDA grows a little bit more. The CFO that we generate next year, after finance costs and CapEx, you indicated INR 125 crore of CapEx, I think, from SAMHI's pocket. Do you expect some cash to go towards further deleveraging? My math is telling me you might have about INR 100 crore organic cash for further deleveraging. If you can comment a little on this.
You're absolutely right. I mean, even if you just look at, and we hate doing point forecasting for the future, even if you look at FY 2025 numbers and what would drop pro forma for the current year, you would see that against the INR 443 crore of cash EBITDA pre-ESOP, we would have a cash interest expense of about INR 145 crore, so INR 143 crore. You would see about INR 298 crore free cash before CapEx, right? Before CapEx. Now, for the next year, if you were to apply, let's say, a 15% growth on EBITDA backed by, let's say, a 10-11% growth in total revenue, you would expect the EBITDA to expand by about INR 60-odd crore. All of that is a straight flow through to your free cash. You would expect about, let's say, INR 60-odd crore of free cash.
Our current estimate is that we'll need about INR 125-150 crore for growth capital expenditure and about additionally INR 20 crore for maintenance capital expenditure. The rest is the free cash available, which is obviously available for either growth or deleveraging.
Thank you. Nirvana, I'll request you to come back for a follow-up question. Next question is from Raghav Malik from Jefferies India. Please go ahead.
Yeah. Hi. Thank you for the opportunity and congrats on a good set of numbers. My first question is a follow-up to one of the previous questions. The GIC co-investment on 4.2 mentioned, the 4.2 conversion you mentioned is INR 50 crore, but the other conversions that are happening and integrations into the upscale portfolio W and Westin, what would the GIC co-investment be, the amount if you could quantify?
Raghav, just to clarify, when we look at a total capital expenditure growth plan, the largest bit in that today is the Westin and Tribute Bangalore, where we have INR 375 crore of pending CapEx over the next three years. Of that INR 375 crore pending CapEx, GIC will first bring INR 150 crore to get to a 35% position. The subsequent incremental will be funded by both partners in a 65-35. We need to remember that the three subsidiaries that are part of the joint venture today have a trailing EBITDA of about INR 140 crore and a net debt of about INR 150-160 crore. We do expect a lot of free cash to come through those subsidiaries, and our expectation is that that itself will fund a reasonable amount of capital expenditure required to build out the Westin and Tribute.
For the other assets which are outside of the joint venture, let's say the W in Hyderabad, the conversion of the 4.2 of Courtyard or 4.2 of Tribute, which are the big capital expenditure items, that is going to be done from the free cash that we are generating in our business.
Okay. So for that, GIC will not be contributing?
No.
Got it. Okay. Thank you. The other question that I had was for May, what would the revenue or FR impact kind of have been because of any calculations or rescheduling that we may have seen?
Yeah. So we saw April being very strong, and May, because of that one week of escalation, we did see we are, for the month, maintaining a reasonably we're still maintaining a reasonable small growth over last year, but for the quarter, we're maintaining a reasonable growth, actually. Because of a very strong April, we are maintaining a reasonable growth in the current quarter, but for the month, it is so far kind of flattish because of what happened for those two, three weeks, really.
This is revenue growth, right?
Total revenue growth. Yeah.
Okay. Okay. Thank you. Thank you. Good luck.
Thank you very much. Ladies and gentlemen, we'll take that as the last question. I now hand the conference over to Ashish for closing comments.
Thank you so much. I'd like to thank you all for your time and, of course, to our shareholders for their support. I think we're very proud of the fact that SAMHI has in just 14 years created an industry-leading platform, and we believe we are now ready to pivot the business towards its next phase of growth and value creation. We look forward to continuing to talk to you and end up achieving that end goal. Thank you so much, and talk to you soon.
Thank you very much. On behalf of SAMHI Hotels Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.