Witnessed 70% QoQ revenue growth in July 21 – Lemon Tree Hotels

Witnessed 70% QoQ revenue growth in July 21 – Lemon Tree Hotels

 Update on the Indian Equity Market:

On Monday, Nifty closed in the green at 15,789 (+0.02%). Among the sectoral indices, Realty (+3.2%), PVT Bank (+0.4%), and Bank (+0.4%) closed higher. IT (-0.5%), Metal (-0.2%), and Media (-0.2%) closed in the red. Ultra tech (+2.5%), Grasim (+2.3%), and Shree cement (+1.9%) were the top gainers. Adani Ports (-1.5%), BPCL (-1.4%), and Bharti Airtel (-1.2%) were among the top losers.

Excerpts of an interview of Mr Patanjali Keswani, Chairman and MD, Lemon Tree Hotels with CNBC-TV18 dated 7th July 2021:

  • On the current situation, Mr Keswani said the demand started picking up from 4QFY21.
  • The hotels were earning up to 50% of pre-Covid levels on a month-on-month basis.
  • The occupancy witnessed a decline in the month of April 21 and by the month of May, witnessed the lowest occupancy level for the sector as well. This was led by localized lockdowns and fear of travelling.
  • In June, there was a pickup in demand. For the Company, the occupancy was higher than 50%. Lemon tree hotels witnessed a 70% revenue growth in July 21 on an MoM basis.
  • Speaking about business hotels, which is 80% of the total inventory for Lemon Tree. They are doing well.
  • On newly opened, Aurika which is a deluxe hotel in Udaipur, he said the occupancy is 80-90%.
  • He said 3QFY22E looks promising led by the inquiries that are coming. 4QFY22E is expected to be a normal quarter.
  • He said the debt is at comfort levels. The earning capacity of additional rooms has not been utilized, once things normalize the additional rooms will start contributing.

Asset Multiplier comments:

  • We believe postponed weddings in 1QFY22 might lead to higher demand in 2QFY22E. This might further increase the occupancy rate of hotels.

 Consensus Estimate: (Source: market screener website)

  • The closing price of Lemon Tree Hotels Ltd was ₹ 43 as of 07-July 2021.  It traded at 143x the consensus earnings per share estimate of ₹ 0.3/- for FY23E. The Company is expected to report a loss of ₹ 1/- per share.
  • The consensus average target price is ₹ 45/- which implies a PE multiple of 150x on FY23E EPS of 0.3/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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