Samhi Hotels Limited (SAMHI) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Q4 and FI26 earnings conference call of Sammy Hotels Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on 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 listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. I now hand the conference over to Mr. Ashish Dugganwal, MD and CEO of FAMI Hotels Limited. Thank you and over to yourself.

Thank you. Good morning, everyone, and welcome to Siami Hotel's Q4 and Full Year Financial Year 2026 earnings call. Thank you for taking out the time to join us today. I am joined by our CFO, Rajat Mehra, EPP and Head of Investments, Gyanadaj and Nakul, and our SVP of Investments. Our Investor Relations Partners, Strategic Growth Advisors, are also on the call. We have uploaded our Q4 F526 financial results and investor presentations on the exchanges and on our website, and I hope everyone's had a chance to go through them. F5-2026 was a year of tangible performance in the midst of real headwinds, and I'm pleased to share our progress with you. I would like to start by informing you that the company delivered a profit before tax of circa 165 crores, which was 89% growth over last year. This was before any one-time or exceptional items, and actually demonstrates how far we have come since we went public. At the start of F5-2026, we set two specific commitments to our shareholders. A, deliver revenue growth in the range of 9% to 11%, and two, bring the balance sheet to a net debt to EBITDA of approximately three times. Despite revenue disruptions in active future growth, we have delivered on both as revenue growth came in at 12.3% per year. And we ended the year with a net debt at 1,450 crores, translating to a net debt to Ladaw about three times. What makes these outcomes meaningful is the operating environment they were delivered in. FY26 absorbed a sequence of destructions that bracketed almost every quarter. The India-Pakistan conflict in May, and unusually severe monsoons and flooding in our core markets in August. The airline disruption in December, and the Middle East conflict in March, which continues. These one-time events compress our full-year revenue by approximately 45 to 52 crores, leading to revenue growth being diluted from a potential of 16 to 17 percent to an actual reported number of 12.3 percent. FI26 was also the year we set up the next decade of Sandy's growth. We formally launched a GIC platform for upscale hotels in India, which is committing approximately 750 crores for a 35% minority stake in a 1,000-room platform. Of this, 600 crores has already been received with a balance to come over the next two out of years to fund CAPEX for the Western-to-viewed Bangalore development. We signed a partnership with Inka Center, which is a part of the IKEA group, for a 162-room upscale hotel at 651 Moira, structured as a long-term wearable lease. It's a landmark addition that strengthens the presence in Delhi NCR through a capital-efficient model. We also secured a lease in a marquee underdevelopment project in Hyderabad named One Financial District for a 260-room hotel, which will redefine the precinct through a combination of lifestyle-red retail, office, and hotel. We could also resolve the NaviMobile litigation and announce the development of our largest hotel project to date, a 700-room combination of Bestin and Fairfield by Marriott, with a potential revenue of almost 325 crores on current markets as part. We have yesterday sought approval from our board to add 35-room Marriott hotel in Sripambudu, where we already have an operating fairfield by Marriott, and has achieved an asset-level roster of more than 30%. This year, we also entered the experiential leisure segment through an acquisition of a 70% stake in Rare India, which is a curated platform of 73 hotels and 1,000 rooms. This is under discussion for an affiliation with outdoor collection by Married One World. I'll now pass over the mic to Rajesh, who will take you through the detailed financial performance. Over to you, Rajesh. Thank you, Ashish. Good morning, everybody.

Starting with our full year FY26 results, the total income stood at 1,279 crores, with the same store red bar growth of 9.5%, in line with our long-term guidance of 9-11%. The four core markets, Bangalore, Hyderabad, Pune, and Delhi NCR, contributed approximately 76% of the asset income, in line with our office absorption concentration. Consolidated bidda for FY26 was $163 crores, up 8.8% on a year-on-year reported basis, with a bidda margin at 36.2%. Adjusted for the impact on account of the GST changes, this would have been circa a 13% year-on-year growth. For the fourth quarter, the total income was approximately 354 crores, a year-on-year growth of 9.3%, with a same-store revenue growth of 6.4%. The quarter held a revenue growth of approximately 12% through the end of February, before the Middle East disturbance reduced the March revenue to sub-minus-1%, thus diluting the full quarter revenue growth. Consolidated bidda for Q4 was approximately 120 crores. While this was 6% below the same quarter last year, it was largely on account of expanded GST impact as more rooms were sold for less than $700,000 rupees, some FFME expense through the P&L, and the pre-opening expenses for the new inventory. The impact of the Gulf prices added to these factors. For the full year, the key developments which impacted our performance includes first, The GST regulatory change, moving the hotel slab from 12% with input credit to 5% without the input tax credit, which impacted the H2F526 consolidated bid up by approximately 14 crores. Second, approximately 5 crores was funded for the FFNE product upgrade, the year-end reconciliation, some actuarial valuation which is done at the end of the year, which are all routed through the TNL. Third, a one-time disturbance that Ashish mentioned earlier, starting with the India-Pakistan conflict in May and ending with the Middle East conflict, which is still continuing. Adjusted for these items, FY26 EBITDA growth would have come in line of 19% to 20%, with margins of 38% plus. Q4-FI-26 Consolidated EBITDA would have been approximately 149 crores, representing a year-in-year growth of approximately 16.8% in line with the trajectory we have held before the disturbance. Moving below EBITDA, depreciation and amortization for FI-26 was 127 crores versus 116 crores in FI-26. Finance costs for the year was 171 crores, sharply down from 225 crores in FY25, reflecting the impact of the GIC cap infusion starting in June 25, and consequent deleveraging and the reduction in the cost of borrowing. PBT before exceptional item almost doubled to 165 crores for the year, up from about 87 crores in FY25. We also booked defer tax income of approximately $300, recognized in the fourth quarter on account of formal recognition of bought forward losses and unabsorbed depreciation that will have recognized in our balance sheet as a defer tax asset, reflecting management's increased confidence in the continuous utilization of the shield. This is a non-cash accounting-driven income line. FY26 reported PAC included the Q4 defer tax recognition, the Navi Mumbai, and other impairment reversal of close to about 83 crores, and a gain on sale of discontinued operations in Caspia, Delhi was approximately 567 crores. On the balance sheet, the net debt as on 31st of March 2026 stood at 1,450 crores, a reduction of approximately 516 crores from 1,967 crores as of March 31st, 2025, prior to protecting the GIP infusion deployed for deleveraging. The net debt to BIDDA at the end of the year is approximately 3.3x. The equities stood at approximately 2,286 crores at the year-end versus 1,142 crores at the end of FY25. The effective interest rate for the group is now 7.9% as on May 21, 2026. And an annualized interest cost run rate has actually come down to about 130 to 135 crores. Our credit rating has been upgraded to A plus stable by both KR and ICRA during the year. The combination of consistent same-store revenue growth, further labor for improved margins, decline in finance costs, and fully capitalized growth pipeline gave us a free cash flow generation of approximately 300 crore in FY26, both interest and LG minimum guarantee payments. This is the number that we underwrite for the next phase, and Ashish will speak on how this will compound. With this, I now request Ashish to take you through the growth projects and concluding statements.

So, FI26 was the year that Sammy's free cash flow generation became real, and FI27 onwards is the year that free cash compounds. Let me lay this out to you. Our FI26 free cash flow of approximately 300 crores became approximately 315 on a run rate basis once the additional interest savings we have secured is factored in. Over a five-year horizon from FY27 to the current fiscal to FY31, that base alone held flat produces approximately 1,550 crores of free cash. Layering on the same-store revenue growth, even at the lower end of a 9% to 11% range, adds approximately an additional 1,000 crores of incremental free cash over the five-year period. And on top of this, we have a fully committed pipeline of new openings, beginning with the United City Hypertar at the end of FY27, the Tribute Portfolio at Bangalore Whitefield at the end of FY28, the Westin at Bangalore Whitefield, the upscale hotel at Inka Noida, and the new Marriott Free Pembadur, Chennai in FY29 and FY30, together adding an increment that takes a cumulative free cash post-interest over the FY27 to FY31 window to more than 3,000 crores. Our future free cash flow is further complemented by demonstrated capital recycling track record. Over the past three years, Samsung has recycled approximately 960 crores of capital, 210 crores realized by monetizing four non-core hotels at an average 20 times EV2 EBITDA, and approximately 750 crores through the GIC capital infusion into subsidiary platform. Of this, approximately 650 crores was deployed to reduce debt and the balance funding of rate of new acquisitions. Therefore, capital recycling is an established part of our playbook, not an opportunistic tool. We've identified further candidates within the portfolio, and we will execute selectively to maximize returns on capital employed, accelerate our deleveraging, and fund growth. Going forward, the 3,000 crore plus of cumulative free cash over the F527 to F531, coupled with our established capital recycling program, is allocated against a structured framework. First, continue deleveraging towards a medium-to-long-term net debt-to-bidder target approximately 2.5 times. Second, the commitment to fully fund the 2,200 crores of CAPEX across the existing pipeline, including Navi Mumbai. Third, retain investable surplus for tactical margin and acquisitions and adding long-term variable leases where returns are very creative. And fourth, as free cash flow compounds beyond our committed growth requirements, the board intends to evaluate disciplined mechanism to return capital directly to shareholders in a manner of consistent long-term value creation. Looking ahead, FI27 builds from the FI26 stage. We are confident of delivering under 7% same-store revenue growth with healthy margin expansion on top of the ongoing contribution of the assets that opened during FI26. The GST impact being normalized from quarter three FI27 as the year-ago basis reset. We are also confident of contributions coming from W-Hazabab in the near term. With the GIC platform giving us institutional capital firepower, the Inca partnership giving us a marquee in Delhi NCR relation on wearable lease, the Rare India platform giving us capital efficient entry into a rapidly expanding experiential leisure segment, Sammy is now positioned to compound free cash, expand the portfolio in core market, transform the P&L through multiple big block assets in a pipeline without taking incremental leverage and without dilating equity. Thank you for your time today, and we'll now open the floor for questions.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touch screen telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants, you are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all, you may press star and one to ask a question. We will take the first question from the line of Karan Khanna from Ambit Capital. Please go ahead.

Yeah, hi. Thanks for the opportunity. Firstly, please can you provide some color on how April and May have trended so far, and how is 1Q FI27 looking so far in terms of booking and vice activities, and as a follow-up, given you that the benefit of a favorable base in FI26, how should you think about those expectations for FI27?

So, Karan, cumulative UTD, quarter till date, is tracking double-digit revenue growth. And bear in mind, April was slattish, May is strong, and that kind of answers your second part that we also inherited a very weak base in May of last year. So, I think given the fact that we almost lost a quarter last year, you know, one month Every quarter because of some issue, we think that even though the Gulf crisis will continue to impact absolute numbers through the first quarter, the year-on-year growth will easily be maintained in double digits current.

Sure. And just on the GST impact, you know, seems like GST is more like a permanent reduction in margin since the rules are unlikely to change. So, in light of this, what margins are you expecting in FI 27, 28, and how would those margins look like prior to the GST implications?

So currently, the margins we expect to be around 38% or so. There is an impact of GST for sure, which is permanent in terms of absolute basis. But even then, we should maintain a 38% margin through the year. And don't forget, a lot of our pipeline is all upscale where we don't have many rooms selling for less than 7,500 rupees. So we should maintain a 38% plus margin at a group level.

Sure. And then secondly, if I look at slide 32, you know, given the kind of pipeline that you have in FY27 and beyond, is there a spillover risk in terms of construction dealing in any of these production pipelines? And given that you've had four major development announcements during the year, For FI-27, should we continue to see more acquisition or capacity expansion announcements, as well as the asset recycling thing continuing, or will the focus now be towards stabilizing the existing pipeline first before pushing the asset editor towards growth?

So, Karan, I think you know Sammy for a while. We are a very well-set management team with specific responsibilities to each group. We have a very strong operating team, largely led by our operating partners. They will focus on ensuring that we deliver on the same store of the operating assets without being distracted by what's happening on the M&A space. That's one that I think at all times we have separated our operating teams from our growth teams. The second question about acquisition versus capital recycling. Capital recycling, I just stated, that is something that we'll continue to look at. We have identified a few more candidates within our portfolio, which we think where we can extract our capital from. And as we extract capital from those assets, we constantly look to redeploying them so that the return ratios can be improved for the company and for our shareholders. Acquisitions are always opportunistic current. You know, we want to maintain discipline of discount to replacement costs. We want to maintain the discipline of underwriting, mid-teen, Rossi's. We want to maintain the discipline of not investing in long-lead greenfield assets. And, you know, we have some because of adding inventory and so on and so forth. So we have very strong guardrails, but capital recycling is something that we continue to evaluate through the year and next year, including also redeploying that capital for more interesting opportunities.

Great, and I'll come back in the queue for follow-up sasis. Thanks a lot.

Thank you. Before we take the next question, ladies and gentlemen, in order to ensure that the management will be able to address all the questions from the participants in the question queue, we request you to kindly limit your questions to two per participant. If you have a follow-up question, please free to join the queue again. We will take the next question from the line of Viraj Mahadevia from MoneyGrow India. Please go ahead.

Hi, I'm Susan Tain. Congratulations on excellent results and on the re-leveraging.

A very quick question. Given the new projects coming up this year, what is

likely to be the revenue growth as a percentage for FY27?

Sorry, the line is dragging a little bit.

Hello?

Sorry to interrupt in between. Ashish, I would request you to please self-neutral. I'm sorry, Viraj, I would request you to please self-neutral line.

Yeah, I think the question was about what's the revenue growth we expect with the new opening. I think let's just break it up year by year. So what do we have in FY27? So FY27, first of all, we have the same store of hotels. This portfolio grew in the zip code about 6% to 7% last year, with a lot of interruptions. Without that, this would have grown comfortably in the zip code of 10%, 11%. Given the base has been reset, as Karin mentioned on the earlier question, we expect the same store hotels to comfortably grow in the zip code of about 9% to 10% year-on-year for FY27. Two, we had undertaken a fair bit of renovation and additions during FY26. Just to mention a few, we had added inventory, almost 20% inventory to our Sheraton and Hyderabad. We have added inventory to our Hyderan Sea Pune. We have added inventory to one of our Holiday Inn Express hotels. We obviously opened two more Holiday Inn Express hotels during the year. We also undertook significant work in our high place, Gurgaon, where a significant inventory was shut for renovation, has reopened, there's a new ballroom, and so on and so forth. So we do expect that the capital and the effort to get invested in FY26 in these assets will add on to the same stock for FY27. And if not, they give us enough cushion and hedge if the current crisis was to continue longer. And therefore, being conservative, we feel that while if there was to be no crisis, same store would have grown at about 9% to 10%, and incremental impact would have been about 3% to 4%, total revenue growth would be about 14%. But I think at this point, we'd like to guide with an element of caution that the current crisis may continue, and therefore the overall revenue growth should be underwritten in the zip code about 10% to 11% worldwide. So that's, we expect FI27. FI28 is a big year for us because we opened the W in Hyderabad. And notwithstanding what we are seeing as a current crisis, the location of that hotel, the brand and the product positioning is extremely strong. So we do expect the W Hyderabad to bring, on the current revenue run rate basis, almost 6% or 7% growth. So for FI28, it's extremely well set to add that 6-7% YOY growth because of that new hotel opening. And then beyond that, of course, we have larger openings like the Tribute in Bangalore, then the Westin in Bangalore, then the Noida development. So I think starting at 527, we are in a very secure space because the investments that we have made since we went public.

Understood. Thank you. And Ashish, would you like to guide us towards the interest cost outgo likely for FY27?

So, FY27. So, for FY27 on a pure Excel sheet, the interest expense comes to about 127 crores. But we would again caution the news that we are hearing in the market is that the interest rate cycle may see an upward deviation because of the currency weakness. We have already factored in a 25 bits of increase to indicate a total interest cost in the range of about 135 crores, you know. So we have factored in what we expect could be the interest rate hardening this year. Otherwise, as of today, the cash interest expense will be about 127 crores. But we are guiding towards 135, 140 only because of the fact that we will factor in a 15 to 20 bit increase in the interest rate.

Thank you. I will come back for more questions.

Thank you. We will take the next question from the line of Jinesh Doshi from Payal Capital. Please go ahead.

Thanks for the opportunity. Sir, I was just trying to adjust the EBITDA margin in 4Q for the crisis. So, if I have a look at our reported EBITDA, which includes other incomes, the figure stated is about 149 Crone. And if I exclude other income of about 8 to 9 crores to the reported EBITDA and add about 22 crores of revenue loss that we have seen in the month of March, our EBITDA margin is at about 38.4%, which in the base quarter was about 38.7%. While the decline is not meaningful. But we haven't seen any improvement come through in the EBITDA margins. So, are we kind of facing any operational headwinds on the cost side? If you can talk a bit about that. And also, in that context, our full year guidance of 38%, because 3Q and 4QR margins typically tend to be higher. So, if in 1Q and 2Q, we are slightly lower. So, how should we think about that guidance as well?

Dinesh, very good question. Let me break it up for you, actually. So, when you do the math in terms of adjusting for other income and then adding back the impact of, like, the GST and the whole crisis that you've seen, you're absolutely right, it's flattish margin. But when you drill down our asset level performance this year, you know, one of our large assets has picked up almost 13 crores to 13 crores. of what is called corporate catering and outdoor catering. That one business came at very low margins, okay, and that kind of impacted a bit of what would have been as a slight increase in the margins to what you delivered. So as we rationalized the revenue mix to FI27, that delugative impact of not a very large but still a reasonably sized business that was fixed this year, which reported very low margin, will disappear starting May. So I think there was one asset, one particular contract, slight dilutive impact, which we will not see through FY27.

Understood. And answer one accounting question. The variable lease hotels that we have announced in Hyderabad and Noida. Now, given these are long-term leases, will the rent get capitalized on the balance sheet or will it be?

I'm Gineen Shah, this is Rajat here. See, as far as the lease which are paid, till the time the development of the hotel is happening, all leases will get capitalized. So whatever we are paying for the W today on a regular basis is getting capitalized till the time we open the hotel. After that, it will be a space which will be the P&L as soon as the hotel starts generating revenue.

So, just to reconfirm, all leases have a three to five year minimum guarantee. That is really a part of your…

For that, we will actually create a separate ROU and a lease liability, which has a separate accounting treatment, but the variable part of that is a cost which straightaway goes as a part of…

Even today, Jinesh, about almost 1.5 to 2% of our revenue. is on account of the variable lease payments we make on our existing leasehold assets. So when you compare the EBITDA margins like to like, actually our EBITDA would be in the zip code higher by about 150-270 basis points only on account of the lease treatment. Coming to your second portion, for FY27, we have allocated about 250 to 270 crores as capital success. Large part of this is actually towards the W in Hyderabad. Almost 150 crores is for W Hyderabad for it to be opening towards the end of the year. The balance is for the work going on in the West in Bangalore. Then we are allocating some capital towards maintenance, and we've seen that there is some maintenance requirement. Then we are doing minor renovations in Four Points, Pune, and Jaipur. So we've allocated about 15 to 20 crores there, and then some bit of investment in leisure. For FY28, we expect to maintain a similar zip code of CAPEX, and which then will be directed, majority of that will be directed towards the Western in Bangalore, because W would have been largely fully, you know, invested so far. So that's how we see the CAPEX plan for the next two years, zip code of 250 to 270 crores per year run rate as of today.

Can I ask just one more question? Sure. Small clarification. So, sir, in the presentation, we have mentioned that due to the GST change, the number of room nights sold for less than 7,500 have increased quite a bit. But if I look at the occupancy of the upper mid-scale and mid-scale assets that we have given in the PPT, that figure is more or less constant. And so I was just trying to think through what has happened in Blackie.

The funny part about the GSE regulation is it has nothing to do with segment, it has nothing to do with the average rate of a hotel also. It is applied to each room which is sold for less than 7,500 rupees. So, even in a hotel where we have reported an average rate of 9,000 rupees, if during the month of March, because of the Gulf prices, they saw a cancellation of a group or an event, and they replaced it by another group which came at a rate lower than 7,500, on that proportionate income, we would have lost the GST input tax credit. So, this will not be visible from segment performance. Actually, even if you look at our best-performing hotel, like a Courtyard, Payfield, Bangalore, in the month of March, they would have ended up selling a few rooms less than 7,500 rupees, right? So, the impact is... So, every room which is sold for less than 7,500. And as the revenue management logic would unfortunately tell you, that when you go through a period of crisis, you tend to secure market share and volumes. And some of that comes at a slightly discounted price than you would have otherwise planned for. So, that's why if you see, FYI, in the last six months, the total GST impact on a YOY basis in the quarter three was about eight. Seven and a half crores, actually. Right. And the same amount expanded to about 10 crores in quarter four. Even then, you know, that's not proportionate to the revenue growth we've seen Q&Q, actually. Right. So, that demonstrates that more rooms were sold at less than 7,500 rupees. That's standard revenue management.

Thank you, sir. And all the best. Thank you so much, Anish.

Thank you. Before we proceed to the next question, we kindly request all participants to use handsets while asking a question and keep their lines on mute while the management is addressing the queries in order to avoid any background disturbance. We will take the next question from the line of Vikas Ahuja from Antique Stockbroking. Please go ahead.

V.I., good morning, all, and thank you for the opportunity. At least my first question is regarding this $153 million impact because of… You know, the West Asia disruption. And in our presentation, we have written that inbound FIT cancellation, Airline Cruise, and LENA. So, I mean, is there any residual impact also, which is going into April and May? Or this is just purely a one-off, and we may not see this recurring in Q1?

So, because we have seen the, we have seen that continue through. April, May started seeing a solid recovery. Well, May, two things are happening, to be honest. One is, last year, base was very poor, Vikas, because we had Operation Sindhu in May. Operation Sindhu started around 9th of May or 1st of May. So, clearly, you inherited a very extremely poor base. But even if I ignore it, I'm constantly tracking this current quarter over the same quarter in FY25, actually. Okay. Because comparing it to FY26 is kind of blindsiding yourself for future. So whatever we delivered in FY26 is... You know, while for a management, it's very easy to use that as a base to look like heroes in FY27, but it clearly doesn't set them for success in the long term, right? So when we look at quarter one performance, we are actually comparing it to the quarter one of FY25, because that didn't have an incident like Operation Sindhu, which was actually as severe an incident as what we are seeing currently, right? But adjusting for all of that, what we realized is that even long haul international travel has resumed. Even the customers from US have started flying. Don't forget, the flying time has now increased to 20 hours. It clearly impacts the number of people who would like to come for a small meeting. But we have clearly seen a very encouraging resumption of business from all core markets. The occupancies are not a problem. We're running really strong capacity utilization across the group. But as the business rebalances, it will give us the conviction to restart repricing. So I think as of today, that's why we feel reasonably confident. Okay, listen, the operators give you a calendar year number. We report a fiscal year number. In a typical year, the ratio of fiscal year to calendar year is about 1.04, 1.05, right? So about 4% ahead of the calendar year is the fiscal year ending. Last year, that dropped to about just barely 2%. So it was 1.02, okay? If I take the numbers that have been delivered from Jan till now, which is a very period full of turmoil, to be honest with you, we actually think that the early double-digit growth rates are fairly secure. But when I say fairly secure, be very vigilant and keep monitoring what's happening to the current situation. But as of today, we feel the double-digit revenue growth. It's not something that is at an alarming threat, but the world is volatile. We need to keep watching where we are headed.

That's helpful. So roughly, we should, you know, build in a similar kind of impact that around 150 million for maybe Q1 as well, which would hit the margin. And as you rightly said, you know, FY25 is the base we should look at. So I just want to clarify on that. So, if I look at the GST impact, which was largely for the second half, 180 million, if I annualize it, it would be roughly 300 million for the year. And if I compare it with FY25 base, so there is a 2.5%, 3% drag. So, when we say, you know, 38%, which is 50, 70 basis points higher than FY28, so roughly if I, you know, exclude that, our margin would have improved more than 3 percentage points. Is that a right understanding?

Absolutely correct. The group level would have been upwards of 40%, minus the GST impact. Our upscale is already upwards of 42%, 43%. Our ACIC has now moved in line 41%, 42%. Actually, our Holiday Inn Express portfolio has done really well. So you're absolutely right. GST has a permanent impact on the margins. And that's why for this year, we're getting to be 38%. The good news, Vikas, each year, our reported margins will keep going up on a normalized basis because most of our incremental inventory is upscale, where we don't expect to sell many rooms for less than 7,500 rupees, right? So I think structurally, the company will secure its place at 40% plus reported margins, only given the fact that our incremental investments or openings are all upscale, actually. And a strong market. I mean, actually be cautious. An upscale in Ahmedabad has a risk of selling rooms at less than 7,500 rupees. A mid-scale in Hyderabad and Bangalore has a risk of being sold at that price. So our inventory is opening in upscale and in markets like Bangalore and Hyderabad, which gives us a reasonable security about not selling rooms below that price point.

Right. And Ashish, it's clear to understand that once things normalize, so there would be some upward bias on this 9% to 11%, you know, the target we have on income as well because of the GST reduction. There should be some upward bias there. And finally, anything on this NCR where REPA declined minus 9%? So is the renovation of Hyatt Salis is largely over, and we should start seeing growth coming back there from, REPA growth coming back from this fiscal year? Thank you. That's my last question, and thanks a lot.

Absolutely. So Hyattis-Googon Renovation got concluded actually by end of quarter three, right? And if you see Jan till now, we've seen fabulous growth in that asset. So, we do expect NCR to come back to mid-teens in the current fiscal year. There's no doubt in our minds about that because the base was very low. So, notwithstanding what we are seeing as crisis, we're not worried about some of the assets that we're taking on interventions because the base was doubly impacted, A, because of the renovation, and B, because when they opened, the market was really, really bad. So, there's no need to be concerned about NCR. Hyattest is now fully renovated and open, and it's set to deliver, at least in our opinion, mid-teen revenue growth, if not more.

Yeah, Shisha, we missed on that 9% to 11% if there is any upward bias towards that because of the GST reduction and all.

So, listen, we looked at, just look at the last year number, Vikas. Last year, the total revenue growth in the portfolio was about 12%. Okay. If I look both at the external environment and internal issues, such as renovation and high plays and, you know, ballrooms in the Hydrogen Sea and Sheraton, and we've spoken about this in the first half, you know, unfortunately, we all forget in public markets. But this year, we had undertaken certain capital investments for product improvement, which did impact our revenue run dates, right? FY26 should have easily been a 15-16% revenue growth percent. If we see the Gulf crisis settle down, even if it takes another three months to settle down, I think this year has a fair bit of an upside potential. But that's the potential, right? Our current plan on EBITDA growth, cash flow generation, our targeted leverage, all of that is dependent on just that 9% to 11% revenue growth. Anything we get on top of that will do a couple of things. Number one, it will substantially improve our EBITDA growth plus margins. So all of that incremental EBITDA will go straight to our free cash. And that, of course, has a snowball effect of what that can do to the company. And that's why, you know, every management, just like every equity investor, tends to be cautious about the downside, but clearly works hard for the upside. And that's why we have articulated our capital allocation plan, because we do feel over the next three to four years, there's a lot more upside built into our business that allows us to do all the four things, which is quickly deleverage. Clearly, you know, continue our CAPEX plan, which is not being impacted by anything. Continue to look for growth opportunities. And last but not the least, have the optionality, and I don't want to speak ahead of time, have the optionality to start considering any sort of a shareholder return. So I think there is an upside in the business plan, but we need to be very cautious, especially in times when bombs are flying around the world, really.

Thank you.

Thank you. We will take the next question from the line of Sreejana Mittal from MS Capital. Please go ahead.

Hi, thank you for the opportunity. I have two questions. One is, if I look at slide 28, the income rate that we share, the same store EBITDA shows a negative impact, even if I look at the XPSC number. So, in this, is this drag largely because of that one asset where the margins were structurally lower? If yes, can you quantify that for us? And then a second one is, our understanding is that the incremental flow through from incremental revenue is about 50 odd percent, right? That's generally the case for us. But given the GST impact, how should we think about this? Yeah, that's a good question.

Yeah, so thank you. Good question. So when you look at slide 28 and the quarter 26 in store, you're absolutely right where the GSC has been separated from this. It does include what Rajat mentioned about the FFNE expense and some of the year-end reconciliation, and two, of course, the impact of the outdoor catering and corporate catering business taken at High C&C Pune. So both of those things impacted the difficult. One thing you need to be aware of, Krishna, is that Typically, we see a very significant jump between Quarter three and quarter four revenues, you know, historically. And most of them coming actually post 20th January till end of March. So we've always seen the first 10-15 days of January, mirroring the last 20 days of December, which is a year indication period. Post 20th January, we see a very strong growth in revenue. And typically, hotels are geared to deal with that. And that's the case this time also. And then in that situation, you get a sudden lost income. Good morning, everyone. And so on and so forth. The ability to control cost, you know, is not immediate. So if you see the same thing in April, for instance, you'll see an improved number because the management had a month to respond to, you know, outsourced labor, fixed contracts and stuff like that. So, when you're hit with a crisis, in a quarter, when you're prepared for a significant revenue jump, it's sometimes difficult to maintain the flow through the recovery. So, what you see as minus 3.7% is an account of the epiphany expense through the P&L. You will see the impact of year-end reconciliation, actuarial costs, all of that. And then, of course, some impact of the outdoor catering and corporate catering business that's taken. So, yeah, that's the combination. Can you repeat your second question, please?

No, I think that roughly answers. Our second question was just the flow-through, the 50% flow-through. This is a one-off thing. That is what I meant, that 50% flow-through is what we usually expect, and that has not changed even after the WSD change.

So, we do expect a 55% plus flow-through. 50% is underwhelming, 60% is where we are happy. We have seen a median to be around 55% flow-through across the business, and that structurally has not changed.

Understood. Very clear. Just one more question. The depreciation number has also increased a fair bit, sequentially as well. So, can you help me understand what has led to that?

So, see, this is actually on account of one-time revaluation of the balance life of the assets. So, we, after every three years, do a reassessment. So, whichever asset that we feel that actually have almost lived its life, so we've taken a one-time hit of that, and subsequent to this, I don't think there's going to be any material change in the debt number that we have been reporting.

Thank you. Thank you.

Thank you. We will take the next question from the line of Archul Kumar from HSBC. Please go ahead.

Yeah, hi. Thanks for taking the question. The first question is about your long-term target, which we have spoken about. So two things here. So, one, you know, you have shown the past FY27-28, but I just want to understand, where do you see in terms of your, with all the exemptions you're putting and the growth you're putting, where do you see in terms of your rosy target in FY31 and your net debt to EBITDA, and how are you going to fund this 2,200 crore of capex over the next five years, if you could give a bit of a color. And obviously, you know, what kind of assumptions do you have in terms of your growth over the next five years? And, Randy, how do you see these hotels to generate the group level of the margins? So if you could also give a bit of color on that, please. Thanks.

Okay, so I think I'll summarize what three or four questions you've had. One was the expected ROTC. Second was net debt-rib-bidder target. Third was how do we fund our KPIT. And fourth was the asset-level RASPAR growth, right? So let me take the easier questions first, and then I'll come to the more difficult ones. So, in terms of Net Detributor, actually, I'll repeat. Since we've gone public, there are only two guidance we have given. One in terms of what we expect the revenue growth to be in the long term, and I'm kind of proud of the fact that we've held on to our 9% to 11% guidance. Pretty much from the day till today, and we've seen lots of highs and lots of lows in markets. And I think what we have learned is that when you give a long-term guidance, it should remain long-term stable and should factor in the event. So we have factored in events, and we stay absolutely confident of maintaining a 9% to 11% total revenue growth from same-store hotel, right? That's number one. The second guidance we have given is the fact that this company is committing to bring the leverage to 2.5 times net debt to EBITDA, right? We are currently at 3 times net debt to EBITDA. If we had not seen the interruptions that we saw during the year, the number would have already gone to a 2-zip code, right? Could have been 2.8, could have been 2.9, but we would have been at 2.8. So typically when we guide our investors, we keep a margin of error. So we were thinking and hoping we will be at 2.8 times net debt to bid at the end of the year. Added to 3.0, circa 3.0, we are precisely at 3.07 as when we reported our numbers. As of today, we maintain our guidance that this company will stabilize its net debt to be dead 2.5 times. And I think give us another 12 to 18 months, we should be in that SIP code. Third thing is in terms of KPEX funding, and I think we've articulated that our last year's free cash flow production, which is nothing but EBITDA minus interest expense, and lease-MG, is approximately 300 crores. When we looked at the recent interest rate reductions that we've been able to achieve, that number, without changing the EBITDA number, would have been about 310 odd crores. So, now there are three things which will happen. And we are... I'm underwriting, Achal, that this 310 crores is largely secured only because this is on the back of a really, one could say, a tough year, right? So this 310 crores is really available to us for the next four to five years because the base is tested on a really tough year. The second thing that we are underwriting clearly is that 9% to 11% revenue growth. Now, when we looked at revenue growth, EBITDA growth, what could be the future value of this company, we obviously put a lens of optimism and growth. When we underwrite cash flows and leverage, we put a lens of pessimism. So, therefore, what we do is we assume no operating leverage, and we pretty much apply the same revenue growth to EBITDA growth. So if we only get about 9-10% EBITDA growth, that will give us an incremental 700 crores of free cash from our existing pool of assets in a 5-year period. Starting FI 28, when the W opens, and then subsequently we open other hotels, assets from now till FI 31 will contribute incremental about 4 to 500 crores of EBITDA. Now, as we've articulated, we are not seeking incremental debt, and therefore the EBITDA from those assets have a real flow through to our free cash. So we have a reasonable source and visibility of... We are financing for funding the approximately 2,200 crores of KPEX. Now, again, to be cautious, we have done two things. When we are considering the revenue in EBITDA, we have ignored Navi Mumbai and one financial district, Hyderabad. We have assumed zero contribution from those because these are quasi-greenfield and we know what happens to greenfield type. But when we are considering the KPEX, we are assuming these hotels are going as per plan and therefore we have taken the full KPEX for this five-year period. So, we have built in some margin of error, hopefully, in the way we've laid out our cash flow forecast. So, that's the... Three easy questions, okay. Now, let me come to the more difficult question, which is the Rossi part. So, if you see, our current pool of assets are really well geared to get to the targeted 14% to 15% Rossi, right? We think there is very little risk to that. So, the current pool of assets we could underwrite to be at 14% to 15% Rossi. Now, let's target the new openings. Now, the new openings will be a mixed bag. There will be hotels like Inca. There will be hotels like W Hyderabad. These hotels are on variable leases. And unlike the freehold asset, they tend to deliver very good Rossi's early on. So, if the group-level Rossi is in the zip code of 14%, 15%, the W hyperbust opening, let's say, in FI28, when that asset gets fully capitalized, first of all, we don't carry the depreciation of the building in our books because it's de-state, right? We expect the Rossis to be not dilutive to where we are targeting the group to be, right? Similarly, when we get the delivery of the IKEA, the Inca Center Hotel, our investment is largely in FFME and hard finishes. It could be a strong market. So again, this is an asset which will not be very delusive. Third thing, which I think we've not spoken about enough today, is Marriott in Sri Pramudur, Chennai. Now, it's not very often that a company can add a whole Marriott hotel to its existing portfolio without investing a rupee on real estate. So, the current pay deal by Marriott on that piece of land is at about 30% return on capital employed. So, if you take the total capital employed in that asset in the current EBIT, we should be at about 28% to 32% return on capital employed. On that piece of land, we are adding a whole 130-room Marriott hotel. So, as that hotel opens, we expect the Rossi's to be extremely high for that hotel because there's no underlying real estate expense. So, generally, we expect our Rossi profile to be maintained in that mid-team zip code, even though we are opening a lot of new hotels, and classical wisdom will caution you that new openings could be diluted to your Rossi. But a combination of wearable leases and the fact that we are... On a piece of land where the underlying value of land has already been accounted for, gives us a reasonable protection. So, I'm sorry I took long to answer this, but I think it needed a bit of an explanation.

Sure. Thank you so much, Adil, Vishigur. I'll come back in the queue. Thank you.

Thank you. We will take the next question from the line of Web of Mulay from Hightong India Securities. Please go ahead.

Thanks for the opportunity, sir, and cover relations on good set of numbers. My first question was, I wanted to delve a bit more on asset recycling that you mentioned. You want to evaluate more opportunities. I believe we have already done asset recycling north of 200 crores, and as per our earlier target, only 100-odd crores recycling is to be done. So are you planning to go beyond this 300 crore targeted number in terms of recycling? And in terms of the nature of the recycling, is it the complete sale of asset like we saw in case of Ahmedabad or Chennai for our Caspia asset? Or will it be similar to what GIC did, a minority dilution at asset level? That's my first question.

So, Vaibhav, first, I think asset recycling is a part of a long-term strategy, and the driving factor behind asset recycling is nothing but ensuring that we deliver a higher return on capital employed and higher growth. So, constantly the investment committee first and then the board evaluates that our All of our assets geared to A, deliver higher ROC, B, protect ROC, and C, continue to deliver earnings growth from the contribution of the earnings growth from that particular asset, right? Two, we are constantly looking at opportunity cost. That what is the... For instance, the market value of that asset. And what would be a Rossi on the market value? So one thing is a Rossi on our book value, which has been depreciated. Second, what is a return on capital on the opportunity cost or the underlying market value of that asset? And if we feel that the market value is really high, and therefore on the current income, the Rossi's will be really low, but at the same time, we have the ability to acquire a hotel where our Rossi's will be mid-teens to high-teens, we are often compelled to evaluate that candidate for an asset recycling. So this is something just as our investment committee and board meets often in a year to evaluate where should we deploy our capital. And the same board meetings we have debates about is our current portfolio behaving well, and are there candidates within our portfolio which would be better recycled than held on the book. So that's really a capital discipline that we carry as a byproduct of an institutional investor group, right? So therefore, you're absolutely right. We think our target on asset recycling is bigger than a residual 100 crores. We think that in the next two years, it should be about 200, 250 crores, largely through sale of assets. In terms of minority dilution, that is a larger strategic goal, and often is done when either we expect to monetize a value created in an asset, just as we did in Courtyard, Tearfield, Bangalore, where we created tremendous value for our shareholders, and then we kind of, in your language, public markets booked a profit by diluting 35%, and it secures the base for perpetuity effectively, right? Right. That's a more longer term strategic decision, which I would not like to comment because it will be totally speculative. Right. But in terms of asset recycling, I can confirm that our current target is more than 100 crores. I would put that number to be in the zip code of about 200 crores. Right. 202 to 50 crores. Largely in form of single assets where we think our money should be redeployed in more high growth opportunities. However, I hope I have answered your question. Yes, sir.

Just a quick follow-up on this, actually. Isn't there a risk to invest the money that you generate from the sale of assets into a newer venture? Is there a significant delta that you can capture in terms of ROC to take that risk? Let's say if your existing asset is delivering 12-13% ROC, and if you are generating 15% ROC in a new venture, with a risk that it may or may not be successful, isn't there a trade-off in terms of taking that risk?

So, Webhav, I'll give you some of the examples. So, last year, for instance, we sold Caspia Delhi. And we sold Caspia Delhi for a consideration of 65 crores. And, well, on that day, the EBITDA contribution was just about a crore and a half, two crores. But even if we had fully renovated, re-banded, capitalized on the current value of that asset, we would have not given it crores for that asset, right? And interestingly, what are we doing with that capital? That's the capital we're using to do something like a W hyperbuck, for instance. I'll just give you an example, right? Money is fungible, so hard to say it went from A pocket to a B pocket. But the same money which was delivering a crore and a half, two crores of beta against a 60 crore value. It's guaranteed to deliver you a double-digit Rossi in an asset like W Hyderabad. I'm using a word that I normally hesitate to, which is guarantee, but I'm using that word because the margin of error is very, very large in that asset, right? So I can be a slight bullish on that. So you're absolutely right. Asset recycling needs to come with a very, very large margin of safety. And unless that margin of safety is not there, you're absolutely right, Weber. It is not worth considering asset recycling. So all of our asset recycling have carried that significant margin of safety. So even if your new deployment goes wrong on your underwriting, you would still outperform your existing assets. And that's the basic thesis.

Perfectly understood, sir. Second question, typically on Bangalore market, Bangalore market is expected to see good pickup in terms of the upcoming supply, especially into upscale, upper upscale markets, where our majority of portfolio lies. Again, another competitor of yours actually yesterday announced that they are planning to set up a Western brand in Bangalore with Marriott. So, is there a risk that you see for a Bangalore market, especially given the market has run up quite a lot, and over the last couple of quarters, we have started to see occupancy taking a hit, though ADRs are still sustaining at higher levels. So, longer term, is there a saturation risk for Bangalore?

So, wherever this question needs to be answered, market level.

Okay. If you look at our presence in Bangalore, it's Outer Ring Road. And clearly, we are seeing new hotels open through this year in Outer Ring Road, Bangalore. And we have therefore in our own underwriting, when you give a guidance of 9 to 11% for the group level, in that asset, we've kind of moderated our expectations on growth, given the fact we have a large opening over the next 12 months in Outer Ring Road. Our second investment is in Whitefield, which is where we have the tribute in the West End. And I think more, West End has absorbed a lot of supply over the last decade. And now it's coming to that turn where the new supply is not material over the existing base. So supply growth percentage is not threatening in Whitefield, Bangalore. The new supply in Bangalore is concentrated between airport and Hebal, okay, which is really where the land is available, new office growth is happening. We have zero presence in that precinct. So, if you were to take the list of future supply in Bangalore, and I don't want to put a number to it because I don't have the data, but more than half of that future supply is concentrated in that 25-kilometer corridor. It starts at the Bangalore International Airport and will end at Hebal, which is where you have the Manetha Tech Park and all. So I think it's a business of micro markets. It's not a business where supply and demand could be evaluated at a city level, to be honest with you. And the same thing will apply to Hyderabad also, Weber. If you look at Hyderabad, there's a lot of announcements of new supply. But a lot of those announcements are not in the precincts of the micro markets where we have a current inventory or proposed inventory. So all of this needs to be evaluated at a micro market level. That's one. Second, is Bangalore as a market today is a total inventory of about. 17,000 rooms, 18,000 rooms, right? Bangalore needs to add 1,000 rooms more every year for it to be growing at 5% a year, right? And if supply is growing at 5%, which doesn't seem the case, by the way, in Bangalore, which means 1,000 rooms a year every year for the next five years, right? So the supply CAGR in Bangalore may be in the zip code of 5, 5.5%. We need to make sure that demand continues to grow ahead of that, right? Which obviously is a factor of GDP growth rate, growth of office, airlines, ancillary business, so on and so forth. I think the demand environment, the current supply base, the percentage supply growth in tier one market is not a threat. But again, I will completely agree with you. We need to be cautious and evaluate it at a micro market level.

I understand, sir. Can I squeeze in the last bookkeeping question, if I may?

Sure, please.

Just on W Hyderabad, you have said opening will be in 27. Can you specify the quarter in which it will be opening? And related to that, Hayat Region, okay, and Hayat Region C Pune has been in pre-opening for last quarter as well. Any particular reason that we are still mentioning the status as pre-opening on that?

These are 22 apartments which are ready and waiting for the final approval. Sorry, this is not a hotel. The hotel is operating completely. These are 22 new apartments we have completed, but we are waiting for the final regulatory approval. That's why, unless you don't get that, it will unfortunately be seen as pre-opening.

Okay, and on the revenue growth that you mentioned, 9 to 11 percent, we have mentioned this same store revenue growth. Sorry to interrupt them between the above.

I will request you to please rejoin the queue again for more questions. Thank you. We will take the next question from the line of Prashant Biani from Ilara Capital. Please go ahead.

Thank you for the opportunity. Sir, I had a follow-up question on the capital recycling that you answered to previous participants. So, you are recycling hotels which are struggling, and if the ROC based on the market value of any of your hotels is less than what you desire because of Increase in the market value of the hotel, then you are willing to recycle that capital also if the understanding is right. Then, in a way, sir, you are trying to operate a hotel which has a kind of mediocre ROC, looking to scale it up and then offload it. In that case, sir, aren't we kind of digressing our business model to trading of hotels also and not just running the hotels?

No, Prashant. I don't think we are trading hotels. In the last three years, we have sold three hotels or four hotels. Number two, let me clarify, the hotels that we sell often are non-core hotels. We often have bought portfolios, and when you buy a portfolio, you get hotels. Otherwise on a standalone basis, you would have not bought. And therefore, they better be recycled and that money deployed in markets and assets that you are core to you. So I'll give you an example, Caspia Delhi, North Delhi. I know it looks like a Delhi zip code, but North Delhi business is very different to the business we are used to operating in. So, I would want to clarify that it is not trading of hotels, really. Our job is to build a very large portfolio of operating hotels. But if you look to any large income-producing hard asset business globally, the way to protect shareholder value in the long term is to ask yourself hard questions about, is every asset creating future value? Now, not every year you'll get an answer that two hotels are not, but every two, three years, you'll clearly get an asset or two where you feel that you are better off disposing of the asset to redeploy that in a higher return. So it's not active trading, but it is a fiduciary that we evaluate the value of each hotel. We make sure that the hotels we own are geared to provide long-term value creation for our shareholders. And if there is friction to that, I think it's a fiduciary responsibility to make sure that we do the right thing to redeploy that capital. But it does not make it as a trading of hotels. And the percentage of that remains to be minuscule. The impact, by the way, could be substantial, but the actual monetization program itself is a minuscule of what the value that we carry. So, just to clarify that.

So, hotels which are struggling with recycling, that capital is understandable. But if the market value of any, I mean the property prices of any micro market increases, and based on the market price, we are not able to, supposedly the ROC profile is not as per what we are targeting. In that case, sir, I mean, that is a bit confusing. I mean, in that case, I would be a bit confused if you are going to sell off your marquee hotels also. May not be so frequently, but I mean, that sort of creates a confusion.

First of all, I use the word non-core hotels. Even in the presentation, as you see, we have used the word non-core hotels. So, we are not going to sell a Courtyard Bangalore or a Sheraton Hyderabad or a Hyattilipune, right? I think this is about some of the smaller hotels that we acquired. We acquired sometimes as a part of our portfolio acquisition. So, I don't think anybody needs to be worried about us tomorrow saying, oh, the value of Courtyard Bangalore has become 3,000 crores in the market and therefore our EBITDA is only 100 crores. Should we sell it, right? So, if you see the slide number 10, we have used the word non-core hotels sold, right? So, it will always be applied to non-core hotels where their EBITDA contribution is negligible, their future... A better contribution to the group is even less than negligible. So, you don't see the needle moving in terms of revenue growth, EBITDA growth, absolute revenue, absolute EBITDA, but these are non-corotas which have not material contribution to the portfolio.

Sure, sir. Thank you for the clarification.

Thank you. We will take the next question from the line of Karan Kamdar from Choice Institutional Equities. Please go ahead.

Good morning, sir. Thanks for the opportunity. Sir, so GIC, I believe, has committed around 750 odd crores, and we have received about 550, and there are some conditions precedent which are pending. Could you sort of elucidate on what are we expecting and when are we expecting the rest of the money?

We've received 600 crores so far. The balance investment is 150 crores. We expect that to come over the next two-year period because that's coming in line with the CAPEX spending on the Western Tribute Bank Loss.

Go ahead, sir. Go ahead, sir. Thank you. And are we expecting further such investments in a subsidiary platform or are we only expecting sales of entire assets?

No, so we, as I said, mentioned earlier, in the short term, we've identified a few hotels, which, you know, total value should be about 200 odd crores. So, clearly, these are small hotels. At a subsidiary level, there is no plan as a date.

Okay, well, thank you, sir. Thank you so much. All the best.

Thank you. We will take the next question from the line of Viraj Mahadevia from MoneyGrow India. Please go ahead.

Ashish, big congratulations to you and the team on doing a fantastic job of managing the ship. Just a very quick question. Given your performance and ramp in earnings, you're trading at a massive discount to the sector. And maybe that's partly because of the leverage on the books and the fact that you've just become profitable two years ago. Given where the stock is trading, and I understand that growth and deleveraging are priorities, but would it make sense for management to consider carving out a small amount of capital for buybacks on a sustained basis?

So, Geraj, I'll address it in two, three things. Number one, multiples are decided by all of you. It is decided by us. We are fairly confident that notwithstanding the multiples, this company is a compounding machine when it comes to growth of revenue and cash flow, and that itself will create phenomenal shareholder value. Number two, your question about would a cheap stock attract us towards looking at things like buyback? And I would take everybody to that slide number. Just a second. I think slide number 16, and this is an evolving discussion at a board level. Notwithstanding the share price or the discount, Viraj, we are under a fiduciary obligation to create shareholder value and allocate capital. And I think our waterfall has already been stated on slide number 16. And the waterfall states that the first commitment that we have is to maintaining a strong balance sheet because that preserves all of our wealth. So first is the deleveraging, 2.5 times net debt to EBITDA. And the reason we are comfortable with 2.5 times is because A, all of our debt is circa around 12 years. We have very little principal repayments for the first three to five years. Our financing cost is now down to almost 7.9%. So, when you have the ability to carry such high-quality long-term debt with no repayment pressure, 2.5 times clearly is in a very accretive position to create shareholder value. So, I just wanted to articulate why 2.5 times net debt to a bit, and why not lower? Second is clearly we need to make sure that the company has not just adequate but slightly more than adequate capex to fund its growth because when you're developing hotels, there's always a risk as I think current articulated about cost overruns, inflation, and so on and so forth. So the company needs to create reasonable buffers for no surprises. Third is we continue to feel that India provides tremendous growth opportunities. In terms of continue to look at leases, so on and so forth. Having said that, we've become very efficient. If you see last year, all of our were leasehold. Or asset light and rare. And therefore, we have moved rapidly, more rapidly than we would have imagined ourselves to be in a more capital efficient growth model, right? And after all of that, you know, if there is surplus capital, we have already committed that the board will consider a discipline mechanism to return capital directly to the shareholders, right? So, you're absolutely right. Any good company globally will have capital allocation discipline. We have tried to set that discipline on slide number 16. It is going to be a continued discussion at a board investment committee level, but I think this discipline will decide what we do in future. But you're absolutely right. I think we will be open to making sure that we do everything in our means without disturbing long-term prospects for the company, but yet create shareholder value.

Thank you very much. Ladies and gentlemen, due to time constraints, we will take that as a last question for today. I now hand the comments over to the management for the closing comments.

Thank you so much for a very engaging conversation. As I mentioned earlier, F5 26 was, you know, a 12% revenue growth. While some may say it's good, some may say bad. From our perspective, we are excited because in spite of severe interruption, the company and the sector largely held on to a long stated conviction that the demand supply is in our favor. However, I think as we start seeing normalization of many disruptions we've seen during the past one year, the upside continues to be ahead of what we've delivered so far in the past. And that upside obviously goes straight to our bottom line and allows us to have a lot more flexibility to grow the SAMI and also shareholder value. Thank you so much for all of your confidence and participation, and we look forward to speaking to you soon. Have a good day.

Thank you, members of the management. On behalf of Sammy Hotels Limited, we conclude this conference. Thank you all for joining us, and you may now disconnect the lines. Thank you.