Lemon Tree Hotels hits 52-week high on signing agreements for 2 properties

Shares of Lemon Tree Hotels surged 3 per cent to hit a 52-week high of Rs 108 per share on the BSE in Tuesday's intra-day trade as the company signed license agreement for two properties in Bhubaneswar and Kasauli.
 

In an exchange filing on August 21, the company signed two new properties Lemon Tree Hotel, Bhubaneswar and Lemon Tree Mountain Resort, Kasauli. While the former is expected to be operational by Q4FY25 under the management of their wholly-owned subsidiary Carnation Hotels; the latter is expected to run by Q3FY26.
 

The company said that the two additions under two diverse models aligned with their asset-light policy.
 

"These would expand our offerings in different parts of the country to cater to a variety of travellers in different destinations," added Vikramjit Singh, President, Lemon Tree Hotels.
 

Lemon Tree Hotel in Bhubaneswar, Odisha would feature 60 well-appointed rooms, a restaurant, meeting rooms, a banquet hall, a swimming pool, a fitness center, and other public areas. 
 

On the other hand, Lemon Tree Mountain Resort, Kasauli would feature 50 well-appointed rooms & cottages, banquet halls, recreation room, two restaurants, a swimming pool, a spa, fitness center, a library and other public areas. 
 

In the April-June quarter for fiscal year 2023-24 (Q1FY24), the company's profit-after-tax (PAT) jumped 103 per cent year-on-year (YoY) to Rs 27.5 crore versus Rs 13.6 crore, in the year-ago period. Total revenue, too, jumped 16.8 per cent YoY to Rs 224.6 crore in Q1FY24.
 

The net earnings before interest, tax, depreciation, and amortisation (Ebitda) margin, however, contracted 60 basis points (bps) YoY to 47.6 per cent in Q1FY24, owing to increase in variable and fixed costs.
 

Analysts at JM Financial shared a 'buy' call on the counter, with a target price of Rs 115 per share.
 

"We estimate revenue/Ebitda compounded annual growth rate (CAGR) of 19.5 per cent/19.3 per cent over FY23-26E for Lemon Tree. We are not building any margin expansion and expect Lemon Tree’s Ebitda margins to remain at ~50 per cent. We expect return on equity (RoE) to improve further from 13.6 per cent in FY23 to 19.6 per cent in FY26E," the brokerage firm added in a recent note.