Shares of Lemon Tree Hotels gained 3% to ₹75.55 apiece in Thursday's trade after the company signed a license agreement for a 47-room property in Bhopal, Madhya Pradesh.
At 12:30 p.m., the stock was trading at ₹73.95, up by 0.82% as against a 0.13% rise in the benchmark Nifty 50 index at 17,576.
The company is expecting the property to be operational by December 2023 and said it will be managed by Carnation Hotels Private Limited, a wholly-owned subsidiary and the management arm of Lemon Tree Hotels Limited.
"We have found that Madhya Pradesh has immense tourism and business potential and are looking at adding more hotels and resorts in the state to our existing portfolio." Though we are just in February, this is already the fifth hotel signed by the company this year. "We signed 19 hotels in the previous year, and we are looking to top that number in CY23 through our asset-light expansion strategy," said Mr. Mahesh Aiyer, CEO, of Carnation Hotels Private Ltd.
Lemon Tree Hotels is one of the largest hotel chains in India on the basis of controlling interest in owned and leased rooms, the sixth largest by consolidated inventory, and the largest in the mid-market hotel sector.
The company currently operates 8,350 rooms in 87 hotels across 53 destinations, and the company is expecting the current pipeline to become operational by CY 2024/25, at which point it will be operating 11,450 rooms in 126 hotels across 81 destinations, LTHL said in an exchange filing.
In the latest December quarter, the company reported a 151% QoQ jump in its consolidated net profit at ₹48.6 crore, and a 338% increase compared to Q3 FY20. The total revenue for the quarter came in at Rs. 234.1 crore, an increase of 19% sequentially and 15% from Q3FY20.
The operating profit recorded a surge of 50% YoY to ₹127 crore in Q3FY23, while the operating profit margin expanded 1265 bps YoY to 54.3%.
On consolidated levels, the occupancy rate during the quarter was at 67.6%, and the gross average revenue rate (ARR) stood at Rs. 5,738, which is the highest ever since listing and 24% higher than the same quarter Pre-pandemic (Q3 FY20). The RevPAR was ₹3,877, up 19% QoQ and 17% year on year.
The company said that Q3 FY23 has been the best-ever quarter, with most key metrics such as gross ARR, total revenue, operating profit, EBITDA Margin%, PBT, and PAT growing significantly.
Earlier, in a research report, domestic brokerage firm Sharekhan said that the company is likely to benefit from this robust demand recovery since it has one of the strongest brands in the mid-market segment with a 17 percent market share in India.
The brokerage stated that the company plans to reduce debt on books by Rs. 100–150 crore per annum starting in FY2025. The debt will remain stable at Rs. 1,700 crore over FY2022–24. This will result in a consistent reduction in interest costs over the next few years, the report added.
Meanwhile, in CY22, the stock has risen from ₹46.60 apiece to ₹85.65, yielding a return of 83.79 percent. In December of last year, the stock reached an all-time high of ₹103.40 per share.
12 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.