Samhi Hotels (NSE:SAMHI) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY 'twenty seven Earnings Conference Call of Samhi Hotels Limited. This conference call may contain forward looking statements about the company, which are based on beliefs, opinions and expectations of the company as of the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to present. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Jatinwal, MD and CEO of Samhi Hotels Limited. Thank you, and over to you, sir. Thank you so much. Good morning, everyone, and welcome to Samhi Hotels quarter financial year twenty seven earnings call.

0:50 Thank you for taking time to join us today. I'm joined by my colleagues, including our CFO, Rajat Mehra. We also have our Investor Relations partners, Strategic Growth Advisors, also on the call. We have uploaded our quarter two and H1 FY twenty seven financial results and investor presentation on the exchanges and on our website, and I hope everyone had a chance to go through them. I'll start the call today by covering our performance strategy and pipeline, and then I'll request Rajat to take you through the financial statements. And subsequent to that, we'll close with an outlook before we open for questions. Let me start with the headlines. Our same store revenue grew by 12.6%. This is ahead of our long term guidance of 9% to 11%.

1:36 RevPAR growth for the same store hotels was up about 14%. And in this quarter, it was 79% by average rate and about 3.6 percentage points in occupancy. For the quarter, our hotels ran at a 78.6% occupancy, up from 75% a year ago. We have now seen six months of near 80% occupancy levels demonstrating strength of our market and our products. On 37% of nights in the quarter, our portfolio was above 90% occupancy, effectively sold out. A year ago, that figure was 32%. More compressed nights give our revenue manager more pricing power. Even though we have a high inflation environment with fuel prices and impact of currency depreciation on imports, yet our business delivered 60% flow through in the reported quarter before accounting for loss of input tax credit.

2:31 About 80% of the room nights we sold this quarter were to domestic travelers. Much of that demand is created locally by the offices, GCCs, and industrial parks around our hotels. The office Bangalore and Hyderabad, our two largest markets, together absorbed about 7,900,000 square feet of office space on net basis this quarter alone against 5,100,000 square feet a year ago. Hyderabad alone more than doubled from 1.6 to 3,800,000 square feet of net absorption in a quarter. Every one of those square feet became room nights, meetings, and dinners in our micro markets over the next several years. While the airline data shows declining passenger traffic for the quarter over previous year, but this is not a demand issue.

3:17 With higher fuel prices, several routes are rationalized, and this is compressing the supply. In terms of pipeline based business compounds, are building the next leg of growth. Our secured pipeline adds about sixteen seventy rooms and moves another four seventy three rooms up market through rebranding. By FY 'thirteen, we expect upper and upper upscale to rise from 42% of our income to about 60%. This is important because if you see the last six months, the EBITDA performance of our upscale hotel was almost 800 basis points ahead of the broader portfolio. So as we move the portfolio from 42% upscale to 60% upscale, it has a material impact on our reported EBITDA margins.

4:04 I'll give you some update on specific projects, starting off with a 170 room W Hotel in high-tech city Hyderabad. We believe it's a landmark asset in our pipeline, and now it is in the final stretches. MEP, facade, pit outs, all streams are making good progress. We remain on track to open in Q2 FY 'twenty eight. WLG is one of the highest rated products in our portfolio, along with Kotia Remnited Bangalore in one of India's deepest office markets. On a stabilized basis, we expect it to add about 10% to our FY 'twenty seven income base at margins above our portfolio average given our existing Marriott clustering in Hyderabad and no impact of GST regulation change given most, if not all, rooms will be sold above INR 7,500 base threshold.

4:51 The next is the Western and Tribute portfolio of Whitefield Bangalore with 142 existing operating rooms and two twenty rooms being added. The existing one twenty... One forty two room Trinity Hotel is being renovated in phases into a tribute portfolio by Marriott. The Western Tower site has moved from excavation in Q1 to basement construction in Q2, and each quarter, you will see the building slabs being added at a rapid pace. We are very bullish about the performance of this combined three seventy room upscale hotel in a very strong market. The other upscale hotel at Inca Centre, Noida with 162 rooms is also making great progress. The hotel is a part of 2,500,000 square feet of mixed use development with direct access to retail and offices. It is in a long term variable lease, so our upfront capital during construction is limited.

5:36 The project is now at 2nd Floor slab and making rapid progress. Moving to Rare India, integration work for the pilot is at final stages, and they are targeted to go live on the outdoor collection by Marriott Bonvoy in this coming December. This gives Rare partners a global distribution they will benefit from. For SAMHI and Rare, it is a fee led platform that needs very little capital and will start adding to our Y o Y revenue and EBITDA growth starting FY starting quarter one FY 'twenty eight. The excitement of this platform is that with efforts to keep adding hotels to this platform each year, we create a strong layer of non same store growth without material capital expenditure. I will now hand over to Rajiv for the presentation. Thank you, Ashish. Good morning, everyone.

6:22 I will take you through the P and L performance, the impact of the GST changes and key balance sheet highlights. Our total income for Q2 FY 'twenty seven stood at INR342.7 crores, representing a year on year growth of 15.6%. Of the 45.6% increase in the asset income, 35.5 crores was contributed by the same store growth. New and acquired assets contributed remaining 10.1 crores led by the Trinity Bangalore and the Holiday Inn Expresses at Greater Noida and Calcutta. Consolidated EBITDA increased by 12% year on year to INR 123.8 crores with an EBITDA margin of 36.1%.

7:10 Excluding approximately INR 10 crores impact of the changes in the GST regulation, which was not present in the base quarter of Q2 FY 'twenty six, comparable EBITDA would have been approximately INR133.8 crores. This represents a year on year growth of 21.3% and a comparable EBITDA margin of approximately 39.1. As the change in the GST regulation became effective in late September of twenty twenty five, the base quarter from Q3 FY 'twenty six onwards already reflects this impact. Beginning the next quarter, no GST related adjustment will be required as the reported EBITDA will converge with the comparable EBITDA.

7:57 The finance cost declined by 10.3% year on year to rupees 38.3 crores, reflecting lower interest costs and improved credit profile. The depreciation for the quarter stood at 32 crores. Profit before tax and exceptional item increased by 39.9 year on year to INR 53.4 crores. During the quarter, we also recognized an exceptional gain of INR 3.9 crores from the sale of non core land parcel at Fuso. The tax expense was INR 16.2 crores, was largely deferred tax and noncash in nature. Following the recognition of deferred tax asset in FY 'twenty six, this asset is now being utilized as the company generates full profit.

8:47 Please note that in Q4 FY 'twenty six, we recognized deferred tax asset in our P and L. We expect similar recognition in Q4 FY 'twenty seven as well, which will have a positive impact on our reported numbers. TAC for the quarter stood at INR 41.1 crores, of which INR 33.5 crores was contributed or attributed to SAMHI shareholder. The year on year decline in the reported PAT was entirely attributed to the high base of q two FY twenty six, which included exceptional gains of 84.1 crores arising from reversal of impairment on Navi Mumbai asset and sale of Casper Den.

9:35 Profit before tax and exceptional item for H1 FY 'twenty seven increased by 35.4% to 86.2 crores, while the PAT stood at 66 crores. Excluding the onetime exception in Q2 FY 'twenty six, our PAT for Q2 FY 'twenty seven grew by approximately 137%, which is more than double as against the same quarter last year. Turning to the balance sheet, the net debt stood at INR $14.58 crores as on September 2026, representing a reduction of INR 35 crores from June despite continuous investment in our growth pipeline. Capital work in progress increased to INR $2.19 crores from INR 139 crores in March, primarily reflecting ongoing investment in W Hyderabad and the rest in Bangalore.

10:34 Net debt to the trailing twelve months EBITDA stood at 3.1 times. After adjusting for capital deployed in the growth projects, the ratio was 2.2 times. Our credit rating remains strong at A plus Our effective rate is approximately 7.8%, which is around 300 basis points lower than at the time of our IPO. Following the recent increase in RB's repo rate, we expect the overall cost of borrowing to increase gradually. Free cash from the quarter was approximately INR83 crores after the cash interest payment of INR35 crores. The cash and cash equivalents stood at INR279 crores at the end of the quarter.

11:19 With this, let me hand over to Ashish. Thank you, Rajat. I think we'll pick... I'll pick up two points from Rajat's commentary. One is on net debt and the other is on the finance cost. On the net debt, we have made a commitment to take it down to 2.5 times in the long term. The direction that we see as of now makes us believe that we will get into at least a two handle either by the end of the fiscal year or early next year. So this will keep us ahead of our schedule to make sure that the balance sheet is at a stable state. The second important point is on financing cost. And I think we have always prepared the interest rate environment to remain slightly volatile, which means that we can never take comfort at a point of time. So even if the repo rates go up, you know, let's say we've seen one round of increase, even if they continue to increase for next two more rounds, we see insignificant impact on our overall performance and earnings.

12:19 Also because we have the ability to refinance. Most of our financing has no refinancing expenses. And the second is that we have the ability to use our free cash more efficiently to effectively kind of control the overall absolute finance cost. So while we're watching out for those particular areas, we're not really worried about the impact of that on earnings for this year and for the next year. Let me now close with the second half. I think we expect a good quarter three and quarter four, which would be the strongest quarters of the year. Bangalore, Hyderabad, Delhi have a heavy calendar of marquee events. In Bangalore, we have Aero India, DCC India Expo, AI India Expo, Digital Manufacturing Expo, and the and and the CAHO Diagnostic one.

13:06 In Hyderabad, we have events like Bio Asia, Kissan Agri Show, India Pharma Expo. And in Delhi NCR, we have Bharat Mobility, Auto Expo, India Arts Fair and Medical Fair. And we're just mentioning a few of the many events which are lined up in all the key cities. Now these events will compress demand across our micro markets and compressed nights are where our pricing power is greatest, as you saw with sold out nights this quarter. Also, unlike previous year where due to certain one offs, we saw a dip in quarter four EBITDA over quarter three, we now expect each subsequent quarter to be in the previous one. I'm also pleased to publish our first sustainability report this quarter, which sets the baseline against which we will hold ourselves to account.

13:51 With that, we are happy to take your questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star at 1 on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and Participants have requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the questions are assembled. The first question is from the line of from Ambic Capital. Please go ahead. Yeah. Hi, Ashish. Hi, team. Thank you, and a very happy Diwali to everybody. Three quick questions. First is on, which was earlier proposed to be an extension of Fairfield, but will now be a separate Marriott hotel.

14:42 How does this change the overall CapEx plan for the asset and also the RevPAR assumption and yield on cost versus what was expected earlier? And second one, Ashish, and you just spoke about the MICE calendar for two h across Bangalore, Hyderabad, and Delhi. But any particular trends on, you know, rate to call out, especially during these exhibition dates? Are we looking at more like 20% plus referrals during these dates or months? Maybe you can answer these first, and I'll I'll ask my third question later. Okay. So I'll I'll take the then the ARR first current. So we've... So there was a... Let's go from quarter one till now. You know, Karan, something interesting happened in quarter one. We... And we can talk about our portfolio.

15:31 We closed the quarter at near 80% occupancy, but in quarter one, the rate was rather sluggish, know, 2% growth or so. And our understanding is that it was largely because the crisis, the booking window had collapsed. And with the collapse of the booking window, the revenue managers didn't have the confidence to price an asset in advance because they were not seeing the business on books. We closed the quarter at 7980%. In quarter two, we started seeing improvement in both booking windows. And I think a little bit of conviction about the fact that demand is there, it comes at the last moment. What's happening with events, Karan, is that we have visibility of demand far before the event, so to say. And therefore, that allows a better yielding of the asset.

16:18 The second thing we've noticed in the last two, three months is on unaffected days, and an affected day for us is, I hate to say this, a holiday, a long weekend, or any sort of business interruption event. On a nonevent day, the hotels are sold out and the evening is very strong, and I would say the total revenue growth is for 20, 24%. Right? But having said that, that does get normalized and moderated by the affected days, which could be long weekends, holidays, so on and so forth. So I think we've delivered a 15% revenue growth overall portfolio, about 12 and a half percent growth on same store. This would have been slightly higher, Karan, but for the fact that in one of our large hotels, and we did mention it on quarter four call, we had a very low rated catering business, which has been stopped.

17:11 So I would have expected another, I would say, 15 basis point, 100 basis point impact of that. Otherwise, the same store growth is about 13.5% or so. And I think that is not at risk as we go into quarter three and quarter four. If we get some really sold out date, we can yield it in high teens, but at least I would think that is pretty secure. In terms of Shri Parimador, it's actually very interesting. You know, it's a 155 room hotel. We are already at high twenties return on capital employed in that hotel at a rate of 8,500 rupees. With the addition of the Marriott instead of just adding 30 rooms, first of all, we're adding about 134 rooms. We expect the CapEx to be in the ZIP code of about 160 plus minus.

18:03 And with that, we expect the total yield on cost to be in the ZIP code of approximately 17%. Yeah. About 15 to 17%, largely because the existing model is already paid for the entire land cost. So there's really no land cost per se. It's a strong market. We have been the market leaders with the Fairfield for last several years. That Fairfield has been one of our most consistent performers, including through the COVID period. So we do expect that the additional capital will be deployed at about between 15 to 17% return capital employed. Know? Sure. This is good. Ashish, last two questions. One is on rare. 1Q had 75 hotels and about ten fifty rooms, while 2Q mentioned 70 hotels and 900 rooms. So is the reduction due to deliberate portfolio curation or is it owner exits?

18:58 And second one's on Mumbai. With the MIDC issuing the CC for Navi Mumbai Hotels, can you repeat the timeline here for construction completion? And how are you thinking about the overall CapEx and RevPAR here, especially given the expected supply in the micro market over the next three to five years? Perfect. So on rare, current, no significant changes, but we do see almost monthly shifts to the number of hotels. There is a strong pipeline of about 20, 25 hotels waiting to join. So there is some portfolio rationalization that has happened in the last two, three months, but we expect this 70 numbers to be closer to 85 to 90 hotels, I would say, the next five to six months. Two, I think a bigger focus, Karan, would be how and when we we can onboard part of these hotels on the outdoor collection because everything, the fee income will start coming to rare. So as I said, we are going with the first lot end of December, and then we expect every month to keep adding hotels on rare outdoor collection, which is where I think the fee engine will kick in.

19:58 On Navi Mumbai, I must say that we are rather pleased with the current progress in terms of a, approvals, b, in terms of design development. Having said that, it's too early to call out for changing the opening timeline, Karan. And you'll know that in development in India, the whole disclaimer comes true. You know, whatever may go wrong will go wrong. So I don't think we would like to reset optimism at this stage. What we can assure that we are very happy with the progress that we made so far. We are very confident that it is to what we thought it will be in terms of product configuration. We're getting about six fifty eight odd room... 100 odd rooms right now split between Western and Fairfield.

20:47 In terms of CapEx, we've always guided the CapEx to be in the ZIP code of about 900 to thousand crores. We are in line with that. We do expect to be on ground in terms of starting the work probably early two thousand and... Fiscal year 2028. So I think where Navi Mumbai is. I would reiterate since you've asked me this question, Karan, that we are very happy with the progress we're making on best in Bangalore, actually. Right? So while this is a hotel which is more towards end of CY thirty, FY thirty one, Western Bangalore, we would love to take some of you to Bangalore probably around March, April, and you will be very happy to see that from a conversation to a perspective. It's actually a real building coming up the ground. Right? So after W Hyderabad, our biggest excitement is to open the Western in Bangalore.

21:36 And then, of course, we have IKEA development in Noida, And then we have both the Chennai, Sreep, Anubhavadur and Navi, Mumbai. Fantastic.. Thank you, and all the best. Thank you, Karan. Thank you. Ladies and gentlemen, in order to ensure that management is able to request questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Jinesh Joshi from PL Capital. Please go ahead. Yeah. Thanks for the opportunity. Sir, my first question is with respect to the GST meeting that happened in October 26. I think I think there were some recommendations to allow limited ITC benefit to for ten years who are operating below the ARR of about 7,500.

22:27 And given every quarter, we are incurring a lot of about... I'll not say a lot, but GST hit of about 8 to 10 crores. Can you maybe just update on on on this development with respect to either quantum or timeline? Ramesh, I'll I'll let you take this up. The council meeting suggested that people who are in the same line of business are actually eligible to take the credit in case of a hotel which is being sold for less than 7,500. We are also picking actually for the final print, but as far as our interpretation is, at least the same line of business should constitute, you know, the commission that's being paid to OTAs.

23:13 Right? Just taking the argument further, you know, would these expenses that we are paying and we are losing the GST on that, will that also be covered? Unfortunately, the overall notification has still not been issued. We are waiting for that to come. We also understand there are various representation which is being made, and government is actually positive towards, you know, looking at this and passing on the final benefits to the industry. But, Janesh, don't forget that you all have taken their interest to LTTB and STT. So I don't think that first they'll try and resolve that before they get to smaller things like GST input tax. Understood. And and, sir, my second question is with respect to W. If I heard you right, you mentioned that we are targeting an opening of around four year by '28.

24:05 Now given the fact that the is already under progress, and I think our earlier time line, if I'm not mistaken, were not 4Q. So are we seeing any kind of delay in approval like the situation in Pune, which we are facing right now? So, Janesh, the project will be completed end of quarter four. We have built in some cushion because the local authorities had indicated that the fire inspection will only happen after the full building enclosure. So because of that, we are building certain contingencies. Also, our experience in Hygiene, Pune, where the approvals have taken inordinately long. But the project will be largely completed by the end of the fiscal year. Any one of you is more than welcome to walk the site.

24:50 But we're just building contingencies to make sure that our estimates for FY 'twenty eight are not disturbed at the last moment. Understood. One last question from my side, maybe split into two sections. One is with respect to the commentary that was given in the opening with respect to GCA recognition that can happen in fourth q. And and and if I talk about fourth q twenty six, that's the growth about $3.30 odd crores and the quantum was very high. And the commenting surrounding the recognition that will come through in full view of this fiscal was also there. So maybe if you can just quantify that because that will have an impact on the reported fact number. That is one. And secondly, sir, how should we think about the growth in RevPAR rate between rating occupancy in second half? Given, I think, in this quarter, we saw a growth of about 9% in rates and was sure the flu is considerably better.

25:57 So how to think about that split in second half, especially given your commentary surrounding a lot of events that are about to happen in Bangalore, Hyderabad and Delhi? That is the last question from my side. I'll take up the second one, and I'll ask Rajiv to clarify on the total recognition of tax assets later. Ganesh, I think we would see a stronger Q3 and Q4. The only thing is that, you know, we are very reluctant to, so to say, give a forward guidance, but let's break it up. We've seen about a 14% RevPAR growth this quarter.

26:44 We expect to maintain that growth through quarter three and quarter four. Don't forget that we will have a Diwali week coming in November, and then we will have about a fifteen, twenty days interruption around Christmas and New Year. So, you know, I think quarter four will be much stronger because post New Year vacation, since pretty much March 31, we see a home run. Last year, of course, it got interrupted by the Gulf crisis. We have fingers crossed. No such things happened this year, incrementally over what we have seen happen. So quarter four may end up being much stronger, honestly, but I would think that all of us should continue to underwrite this 14, 15% growth driven by about a 10, 11% growth in the rates and the balance coming through better capacity utilization.

27:34 I think what will... What may happen is the is the bridge between RevPAR and total revenue. So as you know that while the RevPAR grew at 14 and a half percent, but then when you grow at I'm talking same store, by the way. Right? Because of increased food and beverage income in quarter three, quarter four on accounts of events, weddings, so on and so forth, we do expect that the total revenue growth may be slightly better than we have done in quarter two largely because it will catch up to the RevPAR growth. Right? So my sense is we should model the total revenue growth to be also in the ZIP code of about, I would say, 13, 14% for same store. RevPAR also around 14, 15%. Good flow through. In terms of, you know, I would just optic Y o Y growth, they'll be very good because, you know, we've been reporting comparable EBITDA margin for the last four quarters because of the GST.

28:27 From quarter three onwards, there is no comparable because we have impact in both years. Right? So we will go back to reporting the right EBITDA growth will be... Which will be in high teens, honestly. So I think we'll see some of these changes in quarter three, quarter four. But, Dinesh, don't forget, it's it's... These are when there's a lot of volatility. So we should bank the performance and continue to work harder than expect that magic will keep happening. Right? So I've banked the performance, but we remain very cautious about how quarter three and quarter four will pan out. There's nothing on the statistics and data which makes us worried. But, of course, there are events which are beyond control. Right? Rajat, from your side. So, Janesh, specifically on the deferred tax, the deferred tax recognition, which is still left for us to take in the P and L, is roughly around 100 odd crores put together. And we expect that to be taken in our P and L in the q four. That's the time we... As per our internal policy, accounting policy, we discuss with the auditors and take the final impact of that in the P and L. And the moment that's recognized, that's an effective upside in the p and l for that particular quarter.

29:32 However, you know, there will still be tax expense which will be coming on account of the deferred tax that's been recognized in the past. On a net basis for the next h two, the tax benefit, you know, netting off against the expense with the tax asset will be somewhere in the range about 25 to 30 odd crores. Understood. Understood, sir. Thank you so much and all the best for second half. Thank you, Dinesh. You. The next question is from the line of Prashant Biani from Elara Securities. Please go ahead. Yes. Thank you for the opportunity. Sir, if I can you corroborate whether high-tech city micro market has seen a very sharp ADR growth in the last six months and your assumption of around 10% revenue contribution from W on a stabilized basis.

30:29 If the high rate growth continues in high-tech, is there some upside risk to that assumption? Okay. So, Prashant, a, we are extremely bullish in Hyderabad as a overall city because of fantastic infrastructure, a very good base of existing businesses, a rather diversified nature of businesses, you know, between high-tech and financial district, you know, presence of infrastructure companies in Hyderabad. So I believe that Hyderabad has... Is a... We are long on Hyderabad in terms of the next big city in India, number one. Within that, high-tech city is perhaps the most mature. It has over 100,000,000 square feet of existing office space, low single digit vacancies, good rent, and the growth continues to remain unabated, right?

31:24 With that backdrop, we do think that the high-tech city market has obviously done well. I mean, I'll give you an example. We have a Holiday Inn Express in high-tech city, and that for several quarters has remained operating at 20%... 25% premium to the portfolio average for Holiday Inn Express. Right? So if we do a portfolio average of 4,000 rupees in doing that, I think that hotel is about 5,000, 5,100 rupees. Right? That's that's a 25% premium of that market, and I'm not going on external data sources. I'm going by data that we collect internally. Right? So that's one. Second, we know that the product is turning out to be exceptionally good. We also believe that Tableau is a much loved, innovative brand for a tier one city in India. You know, it's kind of rather surprising. There's only one W in India as of now, which is in Goa.

32:16 Of course, there are multiple Ws being developed as we speak by different owners. There's one opening in Bangalore. We are opening in Hyderabad. There's one happening in NCR. But nevertheless, you know, this W will be amongst the first Ws in a tier one location, especially in that sort of the curbside. So we do expect that hotel to deliver outstanding results in terms of rate. In terms of an upside potential, I think you're right. W has the potential to outperform and deliver more than if you take FY twenty seven as a basis. Right? FY twenty seven... I mean, W has the potential to go up to 170 odd crores of top line, which will be in excess of 10% of FY twenty seven total revenue. Right? So I think this is one asset where I would tend to not remain very conservative, but... Or on the side of being optimistic just because of the quality of the curbside and the asset. So, yeah, there is an upside in this asset as we open it.

33:14 And stabilization period would now narrow down to around two years for likes of Delhi, Hyderabad, Bangalore? FY twenty nine will be stabilized for this hotel because don't forget, we are getting enough time in FY '28. Yeah. You know, to kind of open this hotel, capture the full RSP cycle for the next calendar year. So our assumption is that f y twenty nine, this hotel is a stabilized hotel, which is literally the second full year. And it's a 170 room hotel in a market that's very large. So if this is a 400 room hotel, 500 room hotel, we would have been more cautious to give another year. A 170 room in that location with the W brand and the distribution, it shouldn't be a hard thing for us to deliver really.

34:07 The next question is from the line of Achal Kumar from HSBC. Please go ahead. Yes. Hi. Thanks for taking my question. First of all, in terms of your target around net debt to EBITDA, you mentioned you want to reach 2.5. Can you give us a bit of a bridge from here on? How do you see reaching 2.5, including like what kind of CapEx, what kind of FCF you're expecting? And over what time line we should expect 2.5? So, Ashish, just give me a second. Yannis is walking up to me with the bridge. So we we are at about 3.1 right now, plus minus, you know, like, double decimals.

34:59 As I said, we are really working hard to make sure that we get to below three by the... Either the end of this fiscal year or another quarter or so. Right? And then what's happening is that a lot of our current cash public debt is in development assets such as W Hyderabad and which produce no EBITDA. So as W Hyderabad opens for FY '28 and that EBITDA starts coming through... And by the way, our net debt is not really changing materially. There will always be a plus minus 100 crores movement because of, you know, quarterly cash in, cash out. There may sometimes be higher gross cash also on the book. But I think, generally, we've always committed to the fact that our net debt will remain in the range that it is right now. So with the net debt remaining stable and all of our growth being funded from our free cash side, and the EBITDA growing not just on a same store basis, but also the incremental EBITDA coming from hotels like the Blue Hyperbar side, We do think that the path from current three times or, let's say, 2.9 times going to 2.5 times is another, I would say...

36:17 I would think, on the conservative side, eighteen months. Right? Now in that, what we are not factoring in is any incremental capital recycling. And I think we have stated on earlier occasions, Achal, that we have identified one or two hotels in our portfolio where we think we would rather recycle that capital than hold it for the long term. A challenging basis, we always need a counterparty to recycle capital, and therefore, we will hesitate to commit on a time line. But since I'm asking for less than eighteen month period, both to deliver incremental EBITDA and also have the optionality to recycle some capital, we remain extremely confident that SAMHI will deliver that stated around two and a half times over the period that I'm sitting right now. So it's a rather execution driven part, not a lot of risk on where the market would be really in terms of RevPAR and rate growth and all of that.

37:15 Okay. Perfect. Thank you. My second question is about Rare India since they've been so bullish. I mean, you give us a bit of a color in terms of now where are you in terms of sort of revenue EBITDA in FY 'twenty eight, FY 'twenty nine? Do you have any sort of updated color in terms of numbers from where you gave us when you actually want it or or when you acquired it? So any any update on that, please? Yeah. Surely. I think that there are two things. Our excitement about Rare is in multiples. Right? Number one is that for a company like ours, which for the last fifteen years has either grown same store, which is plus minus the market performance, or has grown through CapEx led in... You know, investment led growth. Right? You know, put put capital, build new hotels.

38:09 I think what we are trying to do is build a non CapEx led fee stream for the long term. And, you know, asset light models take time, but as they mature and they ramp up, they become a very well machine. So that's one. But that's more long term, really. Right? The second is that the economics for us is rather rather attractive. You know, as these hotels go on the distribution platform, we get a commission of about 80 naught percent on every booking that is made. Right? I think you'll start seeing the revenue ramp up and the profit ramp up happen from FY '28 because the platforms just go live end of this calendar year. So FY '28 will be the first for the operations of some of those hotels. We think we should get to about, my sense is about INR 15 crores to INR 20 crores of top line in the next fiscal year, which is almost interestingly half a ton of our total investment in a single year, right?

39:08 This will be a reasonably good margin business because, as you said, there is really not... No employees in our roles, no power expense, no... Nothing. So we do think, as we had articulated in March when we had acquired this, this is going to be a business which will grow on its own without capital. This is a business where solving for a 50% ROCE is not a hard thing to do. And in our owned asset, I just responded to current, you put capital and you go to 16%, 17%. So I think both in account of bringing growth to SAMHI on a Y o Y basis and also very high ROCIS. Even though the underlying investment is small, so I'm not claiming that that ROCIS will shift the needle on our portfolio, ROCE. For that, I still need to make do that. That's in Bangalore and W Hyderabad in our existing portfolio.

39:56 But I think this platform will become accretive on all of those accounts in FY 'twenty eight. Okay. Fine. My final question is I just want to understand... Mr. Kumar, may we request you return to the question queue for a follow-up? Thank you. The next question is from the line of Biraj Mahadevia from MoneyGro. Ashish, Raja, congratulations on the strong operating performance. I noticed that there's a large deferred tax in Q2. Can you explain to us a little bit about what is this deferred taxation and why is it so lumpy and how is it likely... You partly explained it to play out in h one versus h two of this year. Sure. Sure, Viraj. So, Viraj, Samhi actually has been sitting on a large and unabsorbed depreciation in our books.

40:53 Now for many years, since we were not profit making, we were not able to recognize the the advantage of that in our balance sheet and the p and l. Now as per the accounting standard, the moment we are able... We turn positive and there is a forecast that we believe will allow us to use these tax credits later on at the time when we become tax payable against... You know, this is the setting off of the losses against the profit for the subsequent year. That is the time we recognize the asset in our books, which basically means that, you know, all of these losses that we have with us today will allow us to save cash outflows at the time when we are actually liable to pay taxes.

41:42 So for asset where we had clear path and we were able to demonstrate to the audit that we have full certainty of recovering of these accumulated losses and numbers of depreciation in form of tax credits. We recognized that last year, and the balance which is left with us will be getting recognized in the Q4 of this year. Understood. And any further plans for asset monetization specifically, Ashish, over the course of this and next year? Yes, Bharat. So we we have earmarked two hotels. And I think on a realistic basis, the realization value should be about 200 to 230 odd crores.

42:32 I wouldn't promise this fiscal year, we only left at five months. But I think, as I said to to Achal's, you know, questions earlier, we would like to get at least half of this executed in the next fiscal year, and that kind of accelerates us to that 2.5. Actually, that... We don't think it's on that honestly. We just think it brings additional capital to the company. And I... Therefore, I use the word not monetization, but recycling because I do believe that balance sheet is strong, does not need any external support, including capital recycling. It just allows us to improve our off fees and revenue growth. Understood. This $202.30 is cumulative or per hotel? Cumulative. Small hotels with insignificant contribution to EBITDA.

43:20 So Understood. As we said, we take this capital back into our balance sheet, you will not see any impact on our revenue or EBITDA. You know? Excellent. And the cumulative CapEx till FY thirty... From today till FY thirty? That's my last question. FY thirty one, I would expect that to include Navi Mumbai. Right? Uh-huh. So that would be about 2,200 crores, of which about 150 crores will be funded by by by GIC. So I think 2,400 crores 150 crores will be funded by GIC. So our net time will be about 2250 between f y twenty seven and f y thirty one. Right? So that's the day of four year period. And all of it, as I said, funded by internal accruals.

44:06 I would again make sure that we give the right guidance. Our net debt is circa around $15.15. About 14. About $14.50, 1,500 crores. It will remain in that ZIP code, Viral, but please be patient and considerate that it may shift by 100 crores plus minus. In order on... Certain quarters where the CapEx is high and the EBITDA is low, let's say let's say quarter one, quarter two. And there are certain quarters, quarter three, quarter four, when the EBITDA and cash production is very high and the CapEx remains largely the same, actually. So we would ask for a little bit of tolerance, but largely, it will remain in that ZIP code of where it is right now. Excellent. Thank you so much. Look forward to ramp up of the new hotels over the next twelve to fifteen months.

44:56 You. The next question is from the line of from Antique Stock Broking. Please go ahead. Yes. Hi. Thank you for the opportunity and happy to value you and the team, Ashish. So my first two questions. So the first one is H1 already near 13%, well above your 9% to 11% guided range, And we expect second half to be strong, then, you know, we... You did talk about tailwinds in FY '28 from W high high high-tech city, earlier in the end, hotels rebranding, you know, coming into FY '28, some part in '29. And then we also have five, six hotel opening post that. So why keep the range unchanged at nine to 11 rather rather than raising it? Because, you know, from where I'm looking at and what you are guiding, it looks like it's it's going to be a much better number. So that's number one.

45:53 Number two is, could you also share the ADR or desktop performance, especially for maybe the three key cities, maybe how Gurgaon has done versus maybe Hyderabad and Bangalore? Thank you. Okay, Vikash. So let me clarify. When we say 9% to 11%, it is for same store hotel. Okay? It does not include the impact of new openings. So so that's one clarification that we... Since we met some of you prior to our IPO, which is May 2023, we have remained consistent on saying 9.3... Nine to 11% is same store hotel growth. Very happy to say last three years, average CAGR for same store is 10.4%.

46:40 Right? I'm saying it for... We said so moment, but it's more important to say that the long term guidance is in the range, and there's no need to change that at least in the short term. Right? Second, you're absolutely right. We've had some, if I may use, boring few quarters last two years where I would think 98% of our revenue was same store, unlike most of our peers which were adding new hotels during this time. So for us, 98% of our revenue has been same store, and that's why our revenue growth has been in that ZIP code of 12, 13, 14, 15% this quarter. We are very happy with that. This changes as we open double Hyderabad, And, you know, we were discussing this earlier that just that one hotel on a stabilized basis should add on an FY twenty seven basis, let's say 10%, but let's say on an FY twenty eight, FY twenty nine basis, six, 7%. Right?

47:35 So then you layer that on top of the same store growth. Okay? So same store, let's take 10%, which is middle of the range, 10.4% is the last three years. You add six, 7% on top of that, you get to 16, 17% revenue growth. And then the good news is that almost every, I would think, six quarters or so with some lags and some catch ups in between, we would have a new hotel open till 2031. So we opened W Hyderabad. We we will have some more additions in Sheraton, Hyderabad actually for f... So FY '28, we have W Hyderabad, which is non same store. You would have some contribution from Rare, which is non same store. FY '29, we will have incremental inventory in Sheraton, Hyderabad, which is non same store and ramp up of WIthabad and Rare.

48:21 Then in FY '30, we would have fingers crossed, we should have the rest in Bangalore, maybe we'll catch up a quarter or so in that year. And then after that, the ramp up of that hotel, then we have Inca, then we have Navi Mumbai. So I think... I would say I keep looking at slide number six of our investor presentation, where from FY '12 till FY '26, Samhi grew at a revenue CAGR of 22%. Okay. Now I know that's not the number we have gotten used to seeing in the last seven, eight quarters. That's because we only started reinvesting capital in '23, '24, 'twenty five. There's a lag. But I think our eyes are set on taking the company back to that high teen revenue growth, combination of 10% same store and the balance coming from new inventory addition. And I think we're very confident we'll get back to that part and this without exerting any pressure on our balance sheet because now we are a cash machine. So, you know, this year, for instance, if, you know, we will produce about $323.50 odd crores of of free cash from operations, our CapEx will be more or less the same. So no change to net debt. Next year, of course, we see growth in EBITDA, our finance cost. Even with another two rounds of repo rate increase will remain in the ZIP code of INR 125 crores to 140 crores, right? And therefore, there's a lot more cash being... I think you're absolutely right. We are not saying SAMHI will grow at 10%, 11%, Vikat. We think same store will grow at 9% to 11 Samhi, with new additions, should

49:52 go back to a growth trajectory, which is high teens, if not early twenties, which is what our past has been. Okay. Now Ashish... Yeah. The second. Yeah. On on on RevPAR, so we saw Bangalore grew at about total revenue of 12%, same store hotels, pretty much RevPAR was about 8% of high base. Hyderabad, fabulous, 21.4 total revenue growth, 19.1% RevPAR growth. NCR, ignore the number. It was 44% RevPAR growth, but that's because we had highest place Gurgaon. Last year was going through renovations, and therefore, I wouldn't like to think this is the And Pune, we have seen a RevPAR growth of 17.2% because of the fact that we left a lot of, I wouldn't say low paying, I would say no paying F and B catering business. The total revenue growth is muted, but RevPAR growth is 17.2%.

50:54 So it's been a healthy environment across most key markets actually in the last six months. Thanks, Ashish. Thank you. The next question is from the line of Aditya Srinivasan from iPod TMS. Please go ahead. Thank you for the opportunity. So I just have a couple of questions. So one would be with respect to ROCE. So ROCE today is about 7% or 8% and with ASIC being about 6% or 7%. So I just want to understand what it would take to reach the line of about 17% to 18%, which is the ROCE of mature assets. So if you could put some color on that. I'll just quickly just I'll turn my second question, too. So I'd just like to understand the year on your path to reach 3,000 crores of free cash flow over the next four to five years. And also, if you could put some color on the guidance revenue guidance by FY '30 or '31, that'd be great. Thank you.

51:53 Thank you, Aditi. So some easy questions, some almost impossible to answer. On Roci is an easy one. Roci is an easy one. So you're absolutely right. There are three buckets of capital employed in our business. I think... If you can mute, there is some background noise,. Oh, yeah. Sorry. Sure. Thank you. So our mature assets are at about, I would think, 15, 16% return on capital employed, and there's a large pool of assets which have demonstrated that. To us, that's important because that shows that as we invest capital, open hotels, and let them stabilize, that's the kind of return capital employed we will get.

52:40 Is low because of a large goodwill, and I think we've explained this before. Both SAMHI and ACIC were foreign owned controlled companies prior to the IPO. There was a fair valuation done of both entities, and that resulted in Samhi's stock price being at INR $2.38, which was the allocation price to Assia. And at the same time, there was a goodwill in the Assia's asset value. So that goodwill technically depresses the return on capital employed of ASEA... Of of ACIC. Sorry. My bad. Having said that, I feel goodwill is a true representation of a company's value just as $2.38 potentially was the right representation of Samhi's value back then. We think that as we mature Fairfield Hyderabad and that hotel is doing really well, we are in the process of renovating Four Points Pune and eventually to become a Koshia Pune.

53:34 The same thing is happening to the Four Points in Jaipur. So this asset, these this company is work in progress, Aditi, as we speak. And the performance of the underlying market and assets that we are maturing is very strong, and therefore, have no reasons to believe that ACIC will also end up being in in mid teen Rockies in times to come. And then there is a pool of capital employed in in assets, you know, let's say, we have put some money in IT and SIPOONA or certain Hyderabad or some of those assets, which are just open. Now the amount is not very large, but nevertheless, they need to start producing stabilized profits. So we do think that in the long term, we should deliver a 14 to 15% ROCE. Having said that, we need to watch out for new capital employed.

54:20 There, the good news is that several of our hotels like Double Hyderabad, Inca, Noida, One Financial District Hyderabad are long term variable leases, which means even though we are... These are new hotels, and when you open a new hotel, you're prepared for low RoCE because you capitalize the entire asset and denominator, nondepreciated, your depreciation in the numerator, and the income is not stabilized. So that's the recipe for low RoCE. Right? But in long term variable leases, Aditya, the good thing is that the denominator does not carry land and building, and the numerator, therefore, does not also carry the depreciation for land and building. It does carry a interest... Lease expense. So a lot of our new openings are on long term variable leases, which will not be even in the initial few years. Right? And then we go to assets like Srivil Gudur, which current kind of led us to explain where because it's an extension to an existing hotel, which is already in high twenties, Rozi, the opening year Rozi should not be 4% as with typical development. It would be accretive to our portfolio average.

55:24 So largely, I think even the fresh capital deployment we are doing, unlike typical new development would not tend to pull down our ROCE significantly. There'll be some impact in the first year or so, but I think we are very, very confident that the company will deliver into healthy and ROCE. Now that's the first part of the question. The second part about f y thirty one, f y thirty. Right? I will repeat. Long term same store total revenue growth, 9% to 11%. Right? We'll be happy with 11%. We'll be happy with nine We'll be excited at 12 We'll be disappointed at seven percent and eight So we believe that given the current demand supply situation, one thing I was writing and then Yana said it didn't read well, so I said maybe I'll speak about it.

56:16 I have and I've been guilty of that narrative as well in the last quarter. When we say we've done 15% revenue growth in spite of all the problems in the world, Okay. I think that second limb should not be said anymore, and I tell you why, for two reasons. Number one, it tends to make you believe there'll be no problems in future. Okay. So it's creating a false sense of optimism in a increasingly volatile world. Second, it disregards the fact that the size of the Indian economy is so that it has the ability to absorb certain amount of global volatility. I will not be cocky enough to say all volatility for all times to come, but you've seen what's happened in the last six months. Right? I think we need to take assurance from the fact that the demand in India is very strong. The supply, at least in Tier one, will find it really hard to catch up. And therefore, we will operate in that environment where total revenue growth should remain the zippor of nine to 11%.

57:11 It has been now three years. We remain confident for the next two years. So five years is a long period to hold to one long term guidance. As and when we see more data come our way, we will revise that. Got it. Thank you so much. That puts a lot of things into perspective. And all the best. Thank you. Happy to value. Thank you. And gentlemen, we'll take that as the last question for the day. And now I would like to hand over the conference to the management for closing comments. Thank you so much. So thank you so much for your patience to being on this call and coming on the previous calls. As I said, we've had a very reassuring H1. We're fairly confident about H2. But I think our excitement comes from what's coming from next fiscal year when we start breaking away from same store adding inventory to our portfolio.

58:02 And I think I'd look forward to speaking to all of you as we get on to that part. Thank you so much, and speak to you soon. Thank you. On behalf of Samhi Hotels Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.