Revenues Not Telling The Story For SAMHI Hotels Limited (NSE:SAMHI) After Shares Rise 29%

Simply Wall St · 6d ago

SAMHI Hotels Limited (NSE:SAMHI) shares have continued their recent momentum with a 29% gain in the last month alone. Taking a wider view, although not as strong as the last month, the full year gain of 19% is also fairly reasonable.

In spite of the firm bounce in price, you could still be forgiven for feeling indifferent about SAMHI Hotels' P/S ratio of 4.3x, since the median price-to-sales (or "P/S") ratio for the Hospitality industry in India is also close to 4.6x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

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Check out our latest analysis for SAMHI Hotels

ps-multiple-vs-industry
NSEI:SAMHI Price to Sales Ratio vs Industry June 10th 2025

What Does SAMHI Hotels' P/S Mean For Shareholders?

With revenue growth that's inferior to most other companies of late, SAMHI Hotels has been relatively sluggish. It might be that many expect the uninspiring revenue performance to strengthen positively, which has kept the P/S ratio from falling. However, if this isn't the case, investors might get caught out paying too much for the stock.

Want the full picture on analyst estimates for the company? Then our free report on SAMHI Hotels will help you uncover what's on the horizon.

Do Revenue Forecasts Match The P/S Ratio?

There's an inherent assumption that a company should be matching the industry for P/S ratios like SAMHI Hotels' to be considered reasonable.

Retrospectively, the last year delivered an exceptional 18% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 249% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Turning to the outlook, the next three years should generate growth of 14% per year as estimated by the six analysts watching the company. That's shaping up to be materially lower than the 26% per annum growth forecast for the broader industry.

In light of this, it's curious that SAMHI Hotels' P/S sits in line with the majority of other companies. Apparently many investors in the company are less bearish than analysts indicate and aren't willing to let go of their stock right now. Maintaining these prices will be difficult to achieve as this level of revenue growth is likely to weigh down the shares eventually.

The Bottom Line On SAMHI Hotels' P/S

SAMHI Hotels' stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

When you consider that SAMHI Hotels' revenue growth estimates are fairly muted compared to the broader industry, it's easy to see why we consider it unexpected to be trading at its current P/S ratio. When we see companies with a relatively weaker revenue outlook compared to the industry, we suspect the share price is at risk of declining, sending the moderate P/S lower. Circumstances like this present a risk to current and prospective investors who may see share prices fall if the low revenue growth impacts the sentiment.

Before you take the next step, you should know about the 2 warning signs for SAMHI Hotels (1 shouldn't be ignored!) that we have uncovered.

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