SAMHI Hotels, 2 more stocks set to sizzle this summer with up to 36% likely upside, says Kotak Equities

economictimes.indiatimes.com:

Chalet Hotels and The Indian Hotels Company (IHCL). On Lemon Tree Hotels, Kotak has maintained a ‘reduced’ stance.
Average hotel room rates in India rose 14% on a year-on-year basis to Rs 7,560 per day in February while the exit room rate stood at Rs 8,900/day witnessing a 7% YoY uptick.

The strength in average revenue per room (ARR) gives improved visibility for FY2025E, leading to an upward revision of 2-5% in ARRs across coverage companies, Kotak said in a note. This implies an up to 6% revision in FY2025E EBITDA.

Of the 55,000 incremental branded keys expected for the industry over FY2023-28E, India saw 9,000 keys getting added in February. The new supply is expected to come at a measured pace, Kotak said.

SAMHI Hotels: BUY | Old TP: 250 | New TP: 270 | Upside: 36%

The stock was recommended at a price of Rs 199, which translates into a 36% upside. SAMHI Hotels has seen a consistent improvement in its earnings, aided by industry tailwinds as well as debt reduction post the IPO issuance in September 2023. The company has a pipeline of 600 keys although the revocation of the leasehold land in Navi Mumbai, which was to house a 350-key Fairfield by Marriott could alter the growth prospects, it said.

While the management believes it has a strong legal recourse to re-assume land possession, in the eventual scenario that it is unable to validate the lease, the financial impact of Rs 86.8 crore has been written-off with potential recoveries of Rs 10 crore, the brokerage said.

Chalet Hotels: ADD | Old TP: 790 | New