| Experienced Management and established presence in hospitality industry
Incorporated in 2006, SHHPL operates a hotel property in Srinagar with 103 rooms along with allied hospitality facilities and has been operational since April 2011. The company is supported by promoters with over a decade of experience in the hospitality industry. The property operates under franchise, marketing and management agreements with Indian Hotels Company Limited (IHCL) and was rebranded from ‘Vivanta by Taj’ to the ‘Taj’ brand in December 2024, reflecting a repositioning towards the luxury segment.
Acuite believes that SHHPL will continue to benefit from its extensive experience of promoters and its strategic location of hotel.
Prime location Enhancing Visibility and Demand
SHHPL’s hotel benefits from a prime location at Kralsangri, Nishat, overlooking the Dal Lake, enhancing its appeal among premium leisure travellers. Its proximity to prominent tourist attractions such as the Mughal Gardens, along with good connectivity to Srinagar city and the airport, supports steady occupancy levels. The serene surroundings combined with scenic views provide a differentiated hospitality experience, strengthening its positioning in the upscale segment. Further, association with the ‘Taj’ brand enhances visibility and attracts a diversified clientele across leisure, corporate, and event-based segments.
Scale of operations and profitability
The company’s scale of operations has shown steady growth, with revenue of Rs. 80.56 Cr. in FY2025 as compared to Rs. 76.16 Cr. in FY2024. The growth was driven by improvement in Average Room Rent (ARR), RevPAR and occupancy levels. In FY2026, the company reported revenue of Rs. 51.00 crore for the year ended March 2026, impacted by relatively lower occupancy and subdued tourist inflows during certain periods, followed by moderation due to the Pahalgam tragedy. Going forward, revenues are expected to increase from expected higher occupancy, increase in room rates and addition of new room inventory from December 2024. The company has an estimated revenue of around Rs. 8 crores in April 2026. The operating margin improved to 54.17 percent in FY2025 from 49.58 percent in FY2024. The improvement in operating margin is on account of decrease in other operating expenses. Consequently, the PAT margin also improved to 38.21 percent in FY2025 as against 33.30 percent in FY2024. The profitability are estimated to be at similar levels in FY26.
Acuite believes that SHHPL’s scale of operations may moderate in the near term due to fluctuations in occupancy but is expected to improve over the medium term with recovery in demand and addition of new rooms.
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| Moderate Financial Risk Profile:
The financial risk profile of SHHPL is moderate, characterized by moderate net worth, high gearing, and comfortable debt protection metrics. The company's tangible net worth stood at Rs. 38.32 Cr. as of March 31, 2025, as against Rs. 7.54 Cr. as of March 31, 2024, due to the accumulation of profits into reserves and treatment of unsecured loans as quasi equity. The gearing (debt-equity) of the company stood at 2.55 times as on 31 March 2025 as against 13.81 times as on 31 March 2024. The total debt of the company stood at Rs. 97.80 Cr. as on March 31, 2025, as against Rs. 104.08 Cr. as on March 31, 2024. The debt profile of the company comprised of Rs. 94.04 Cr. of long-term debt, and Rs.3.76 Cr. of current portion of long-term debt. The TOL/TNW of the company stood at 2.58 times as on March 31, 2025, as against 14.01 times as on March 31,2024. However, going forward from FY26 onwards the quasi equity treatment is not available in the absence of any subordination clause to bank loans. This is expected to skew the capital structure and weaken the gearing substantially. Further, the debt protection metrics of the company stood comfortable reflected by interest coverage ratio (ICR) stood at 4.73 times for FY2025 as against 4.17 times for FY2024 and debt service coverage ratio of 3.62 times for FY2025 as against 3.18 times for FY2024. Acuite notes that the extended repayment tenor of the loans sanctioned under “rehabilitation Package – 2025 for borrowers hit by disturbances” by lenders coupled with moderate cash accruals will support the debt protection metrices. The net cash accruals to total debt (NCA/TD) stood at 0.35 times in FY2025 as compared to 0.28 times in the previous year.
Acuité believes that the company’s ability to mark sustained improvement in its financial risk profile will remain a key monitorable over the medium term.
Moderately intensive Working Capital Operations
The company’s working capital operations are moderately intensive in nature. The GCA days stood at 108 days as on March 31, 2025, as against 77 days as on March 31, 2024. The GCA days are mainly driven by higher receivable cycle and increase in other current assets during FY25. The debtor days stood at 23 days as on March 31,2025 as against 10 days as on March 31, 2024. The inventory days stood at 12 days as on March 31, 2025, as against 7 days as on March 31, 2024. The creditor days stood at 334 days as on March 31,2025 as against 156 days as on March 31, 2024.
Acuite will keep the working capital cycle a monitorable over the medium term.
High competitive industry
The hospitality sector is vulnerable to downturns in both the domestic and global economy. It is also sensitive to high competition and cyclicality. In a downturn, premium hotels are more negatively impacted because, despite high operating costs, their revenue per available room falls more precipitously than that of mid-sized or budget hotels. As a result, the cash flow from premium properties is more vulnerable to economic downturns. Also, the Indian hotel business is seeing fierce rivalry as a result of the expansion of domestic players and the growing presence of overseas competitors.
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