scorecardresearchMotilal Oswal is positive about Lemon Tree, sees a 31% upside in the stock

Motilal Oswal is positive about Lemon Tree, sees a 31% upside in the stock

Updated: 12 Jul 2022, 11:17 AM IST
TL;DR.

  • Motilal Oswal Financial Services has a 'buy' call on the stock of Lemon Tree Hotels with a target price of 86, implying a 31% upside from the stock's July 11 closing of 65.70 on BSE.

The stock of Lemon Tree Hotels has gained 41 percent in the calendar year 2022 so far. Photo: Pixabay

The stock of Lemon Tree Hotels has gained 41 percent in the calendar year 2022 so far. Photo: Pixabay

Ever since the fears around the coronavirus pandemic have ebbed, hotel stocks have been witnessing traction.

For instance, the stock of Lemon Tree Hotels has gained 41 percent in the calendar year 2022 so far.

The stock hit its 52-week high of 71.40 on BSE on April 13, 2022. However, it saw some profit booking as the market sentiment remained fragile due to inflation, geopolitical tensions and rate hikes by central banks. On July 11, the stock closed 0.38% lower at 65.70 on BSE.

Now, some brokerages have started to see more upside in the stock from the current level.

Brokerage firm Motilal Oswal Financial Services has a 'buy' call on the stock of Lemon Tree Hotels with a target price of 86, implying a 31% upside from the stock's July 11 closing of 65.70 on BSE.

"Lemon Tree is well placed to capitalize on the impending opportunity in the domestic hospitality industry and the expected upcycle, due to: (a) its strong presence in the mid-priced hotel segment, (b) stabilization of hotels launched prior to the outbreak of the COVID-19 pandemic in greater demand and higher ARR markets, and (c) an increase in the number of rooms through management contracts," said Motilal Oswal.

The brokerage firm pointed out that with business travel picking up, Lemon Tree is in a sweet spot as nearly 86% of its rooms are located in the business destination.

Occupancy improved significantly in April 2022, led by a recovery in business travel, pickup in MICE activity, and an improvement in international travel, the brokerage firm said.

After establishing its presence and brand in the mid-priced hotel segment, Lemon Tree is now leveraging the same by adding rooms under the ‘management contract’ model. It has a strong pipeline of management contracts planned for the next few years across multiple brands, Motilal Oswal pointed out.

Disclaimer: The views and recommendations made above are those of the broking firm and not of MintGenie.

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First Published: 12 Jul 2022, 11:17 AM IST