SAMHI Hotels: Navigating Growth Amidst GST Shifts and Airline Turbulence in Q3 FY26

SAMHI Hotels Limited, a prominent player in India's hospitality sector, delivered a robust performance in the third quarter of Fiscal Year 2026, showcasing resilience and strategic foresight despite facing external disruptions. The company reported a significant 16.2% year-on-year growth in total income, reaching INR 341.9 crore, underscoring sustained demand and strong pricing power within its diverse portfolio. This growth was complemented by a healthy 13.3% year-on-year increase in same-store RevPAR, reflecting the underlying strength of its operations.

However, the quarter was not without its challenges. The implementation of new GST regulations, which removed input tax credit for hotels with rates less than INR 7,500, impacted SAMHI's Consolidated EBITDA margins. While the underlying EBITDA grew by an impressive 19.2% year-on-year, the reported EBITDA growth moderated to 13.2% due to an approximate 2.0% margin impact. Additionally, the largest Indian carrier airline crisis in December 2025 caused operational challenges, particularly affecting occupancy in the upscale segment due to cancellations of group movements and conferences. Despite these headwinds, management expressed confidence that the overall GST reduction would stimulate long-term demand by making hotels more affordable, especially in the mid-scale segments, and that the impact on margins would be absorbed in the coming quarters.

Financial Highlights: A Quarter of Resilient Growth

SAMHI Hotels' Q3 FY26 financial results demonstrate a clear trajectory of growth, with key metrics reflecting operational efficiency and strategic gains. The company's total income surged, indicating strong market acceptance and effective pricing strategies. Consolidated EBITDA, even with the GST impact, showed commendable growth, highlighting the company's ability to manage costs and maintain profitability. The Profit After Tax (PAT) also saw a substantial increase, reflecting improved bottom-line performance.

Here is a financial summary table for Q3 FY26 compared to Q3 FY25:

The company's 9M FY26 performance further reinforces this positive trend, with total income reaching INR 925.5 crore, up 13.5% YoY, and Consolidated EBITDA at INR 342.4 crore, growing 15.2% YoY. This consistent performance across multiple quarters underscores the effectiveness of SAMHI's business model and its ability to capitalize on market opportunities.

Strategic Initiatives and Portfolio Evolution

SAMHI Hotels is actively pursuing a multi-pronged growth strategy, focusing on both new developments and the rebranding of existing assets to enhance its portfolio quality and revenue mix. A key initiative is the development of the 170-room W Hyderabad, an iconic brand project in one of India's largest commercial districts. This project is progressing well, with design development nearing completion and mock-up rooms expected to commence in Q4 FY26. Management anticipates that W Hyderabad will significantly elevate the company's Average Room Rate (ARR) profile in the region and within the upscale segment.

Another significant project is the 220-room Westin block in Whitefield, Bangalore, where demolition and pre-construction activities have already begun. This is considered a high-conviction project in a strategically important commercial micro-market. The company is also investing in the rebranding and renovation of Trinity Bangalore, which has already seen an interim renovation and is slated for a small refurb program by March end to convert it into a Tribute collection property managed by Marriott. This initiative has already yielded positive results, with a 50% revenue growth observed post-Marriott management takeover.

These projects are part of a broader strategy to shift the company's revenue mix. SAMHI aims to increase the contribution of its upscale and upper upscale segments from the current 42% to approximately 60% upon the completion of these committed projects. This strategic rebalancing is expected to improve long-term earnings quality and align the portfolio with higher-value market segments.

Segmental Performance and Market Dynamics

SAMHI's portfolio is strategically diversified across mid-scale, upper mid-scale, and upper upscale segments, allowing it to cater to a wide spectrum of travelers. The company's revenue split for Q3 FY26 highlights this diversification:

Management noted that robust commercial activity across key markets like Bangalore, Hyderabad, Pune, and Delhi NCR continues to drive demand. These four markets alone captured approximately 77% of the total office absorption in Q3 FY26, contributing significantly to SAMHI's asset income. Early signs of normalization in passenger traffic trends also indicate a positive outlook for the travel sector.

The company's strategy of focusing on capital-efficient variable leases further strengthens its growth prospects. These leases require minimal upfront investment and can be funded through internal cash flows, ensuring sustainable expansion without stressing the balance sheet. This disciplined capital allocation approach, combined with a strong balance sheet and an upgraded A+ stable credit rating from CARE, positions SAMHI favorably for future growth.

Outlook and Management Confidence

Looking ahead, SAMHI Hotels Limited remains confident in its growth trajectory. Management reiterated its guidance for RevPARs to grow between 7% to 11% CAGR for the next 3 to 5 years on a same-store basis. The company also aims to achieve a total revenue of approximately INR 3,000 crore by 2030, with EBITDA accumulation expected to be in the range of INR 3,000 crore to INR 3,500 crore over the next 4 to 5 years. These targets are supported by the ongoing growth initiatives and the favorable demand-supply dynamics in the Indian hospitality market.

Management emphasized that the reduction in GST on certain construction materials would further reduce capital expenditure in ongoing development assets, thereby improving long-term returns. The company's ability to manage repeated event risks, as demonstrated by its resilience during the airline crisis, reinforces its strong operating model. SAMHI's focus on a city-centric business travel portfolio spread across India's most resilient office markets continues to be a key driver of its sustained performance and future growth.