Lemon Tree Hotels shares jumped 3.1% in early trade on Tuesday to mark a new record high of ₹108.50, surpassing its previous high of ₹106.45. This rally came in response to the company's announcement of signing a license agreement for two properties.
The company in an exchange filing on Monday said that it has signed a license agreement for two properties in Bhubaneswar and Kasauli under the company’s brand "Lemon Tree Hotel" and "Lemon Tree Mountain Resort", respectively.
"Lemon Tree Hotel, Bhubaneswar, Odisha, will feature 60 well-appointed rooms, a restaurant, meeting rooms, a banquet hall, a swimming pool, a fitness center, and other public areas and is expected to be operational by Q4 of FY 2025."
"Lemon Tree Mountain Resort, Kasauli, Himachal Pradesh, on the other hand, will feature 50 well-appointed rooms & cottages, banquet halls, a recreation room, two restaurants, a swimming pool, a spa, a fitness center, a library, and other public areas and is expected to be operational by Q3 of FY 2026, the company said in an exchange filing.
Commenting on the development, Vikramjit Singh, President, Lemon Tree Hotels, said, "We are pleased to partner with Birendra Hotels & Banquets Pvt. Ltd. for our signing in Bhubaneswar and with Atithivan Hospitality Pvt. Ltd. for our signing in Kasauli. The two additions under two diverse models align with our asset-light policy. These would expand our offerings in different parts of the country to cater to a variety of travellers in different destinations."
Lemon Tree Hotels Limited 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, according to the company.
The company opened its first hotel with 49 rooms in May 2004 and currently operates 8,600 rooms in 92 hotels across 58 destinations. When the current pipeline becomes operational, the company said it will be operating 12,550 rooms in 142 hotels across 90 destinations.
The group offers seven brands to meet guests’ needs across all levels. These brands include Aurika Hotels & Resorts, Lemon Tree Premier, Lemon Tree Hotels, Red Fox Hotels by Lemon Tree Hotels, Keys Prima by Lemon Tree Hotels, Keys Select by Lemon Tree Hotels, and Keys Lite by Lemon Tree Hotels.
In a recent note, global brokerage firm JM Financial has initiated coverage on the stock, setting a target price of ₹115, indicating an upside potential of 8.5% for the stock from its current trading price.
In the current year so far, the stock has risen by 24%, and in CY22, it soared by nearly 84%.
JM Financial highlights the potential for significant earnings growth driven by Aurika Sky City. Positioned near Mumbai airport’s T2 terminal and set to commence operations in October 2023, this flagship property offers 669 rooms, extensive MICE amenities, and multiple F&B outlets.
The brokerage expects Aurika Sky City to achieve occupancies of 60% and ARRs of ₹12,100 in FY25E. With an expected property EBITDA margin of 55%, it is likely to generate revenue and EBITDA of ₹2.4 billion and ₹1.2 billion in FY25E, and the contribution to LT’s consolidated EBITDA would be 17.0%, it said.
14 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.
