BAJAJ BROKING
Bajaj Broking Research Desk has recommended Lemon Tree Hotels as a 1-year investment. The current market price of Lemon Tree Hotels is Rs. 148 on NSE, the research desk at Bajaj Broking has identified its target price at Rs. 192.
Lemon Tree Hotels Limited (LTH) stands as India's largest mid-priced hotel chain and the third largest overall. With a strong focus on the upscale and mid-priced segments, LTH operates 104 hotels with 9,863 keys. This blog provides a detailed investment analysis based on the latest financial data and projections. Lemon Tree Hotel share price closed at Rs. 148 on Friday, June 21st.
Current Operations: 104 operational hotels with 9,863 keys.
Development Pipeline: 4,156 keys across 62 properties.
Recent Additions: In Q4 FY’24, LTH signed 12 new management and franchise contracts, adding 667 rooms to the pipeline.
Consolidated Revenue: INR 3.3 billion, a 30% YoY increase and a 13% QoQ rise.
Average Room Rates (ARR): Increased by 13% YoY, reaching INR 6,605.
Occupancy Rate: 72.0%, a decrease of 163 basis points YoY but an increase of 605 basis points QoQ.
Revenue from Operations and Management (O&M) Business: INR 144 million, marking a 34% YoY increase.
Total Management Fees: INR 412 million, up 48% YoY.
Sep-23 | Dec-24 | Mar-24 | |
Promoters | 23.2 | 23.2 | 22.8 |
FIIs | 24.8 | 22.8 | 27.09 |
MFs | 13.4 | 15 | 15.35 |
Banks | 0 | 0 | 0 |
Others | 38.4 | 38.9 | 34.6 |
Metric | FY23 | FY24 (E) | FY25 (E) | FY26 (E) | FY27 (E) |
Sales (INR mn) | 8,750 | 10,711 | 13,389 | 16,067 | 19,280 |
EBITDA (INR mn) | 4,476 | 5,233 | 6,695 | 8,355 | 10,218 |
EBITDA Margin (%) | 51.2 | 48.9 | 50 | 52 | 53 |
Net Profit (INR mn) | 1,406 | 1,817 | 2,439 | 3,595 | 5,034 |
EPS (INR) | 1.8 | 2.3 | 3.4 | 5 | 7 |
EPS Growth (%) | 0 | 29.5 | 35 | 47.3 | 40 |
BV/Share (INR) | 10.8 | 12.2 | 12.4 | 12.4 | 12.4 |
P/E (x) | 83.8 | 64.7 | 43.6 | 29.6 | 21.1 |
EV/EBITDA (x) | 122.4 | 104.9 | 83 | 66.5 | 54.5 |
Revenue Growth: Management projects a minimum 15% increase in consolidated revenue over the next three years, driven by growth in ARR, increased occupancy, and expansion in the fee business.
Debt-Free Target: LTH aims to achieve debt-free status in the next four years, aided by robust operational cash flows and the proposed listing of the Hotel PropCo (Fleur Hotels).
Stock Valuation: The target share price is INR 192, reflecting a 30% upside from the current price of INR 148.
Current Ratio: 1.9 (FY23), projected to increase to 3.0 by FY27.
Debt/Equity Ratio: 2.6 (FY23), expected to increase to 3.7 by FY27.
Fixed Asset Turnover: 0.3 (FY23), projected to improve to 0.5 by FY27.
Metric | FY23 | FY24 (E) | FY25 (E) | FY26 (E) | FY27 (E) |
Cash Flow from Ops | 3,912 | 4,727 | 6,028 | 7,275 | 8,666 |
Free Cash Flow | 2,228 | 1,338 | -1,302 | 5,645 | 5,526 |
Cash Flow from Inv. | -2,832 | -3,965 | -7,070 | -1,370 | -2,860 |
Cash Flow from Fin. | -1,323 | -585 | -579 | -4,173 | -3,323 |
Lemon Tree Hotels Limited showcases strong revenue growth and promising prospects. The company is strategically expanding its portfolio and aims to achieve significant financial milestones, including becoming debt-free. With robust financial performance and a clear growth trajectory, LTH presents a compelling investment opportunity.
Income Statement (INR Millions):
Y/E March (Rs million) | FY23 | FY24 | FY25E | FY26E | FY27E |
Net Sales | 8,750 | 10,711 | 13,389 | 16,067 | 19,280 |
Change (%) | - | 22.4 | 25 | 20 | 20 |
EBITDA | 4,476 | 5,233 | 6,695 | 8,355 | 10,218 |
Margin (%) | 51.2 | 48.9 | 50 | 52 | 53 |
Depreciation | 966 | 1,121 | 1,500 | 1,700 | 1,800 |
EBIT | 3,510 | 4,111 | 5,195 | 6,655 | 8,418 |
Int. and Finance Charges | 1,772 | 2,016 | 2,051 | 1,965 | 1,815 |
Other Income - Rec. | 36 | 56 | 130 | 130 | 140 |
PBT bef. EO Exp. | 1,774 | 2,151 | 3,274 | 4,820 | 6,743 |
EO Expense/(Income) | -9 | -7 | 8 | 8 | 8 |
PBT after EO Exp. | 1,782 | 2,158 | 3,266 | 4,812 | 6,735 |
Current Tax | 269 | 335 | 827 | 1,217 | 1,701 |
Deferred Tax | 108 | 6 | - | - | - |
Tax Rate (%) | 21.1 | 15.8 | 25.3 | 25.3 | 25.3 |
Reported PAT | 1,406 | 1,817 | 2,439 | 3,595 | 5,034 |
PAT Adj for EO items | 1,399 | 1,811 | 2,445 | 3,601 | 5,040 |
Change (%) | - | 29.5 | 35 | 47.3 | 40 |
Balance Sheet:
Y/E March (Rs million) | FY23 | FY24 | FY25E | FY26E | FY27E |
Equity Share Capital | 7,916 | 7,918 | 7,198 | 7,198 | 7,198 |
Total Reserves | 621 | 1,750 | 1,750 | 1,750 | 1,750 |
Net Worth | 8,537 | 9,669 | 8,948 | 8,948 | 8,948 |
Deferred Liabilities | 36 | 53 | 53 | 53 | 53 |
Total Loans | 22,429 | 23,895 | 28,534 | 29,929 | 33,463 |
Capital Employed | 36,599 | 39,411 | 43,330 | 44,725 | 48,259 |
Gross Block | 29,560 | 31,143 | 38,091 | 38,591 | 40,091 |
Less: Accum. Deprn. | 5,055 | - | 1,500 | 3,200 | 5,000 |
Net Fixed Assets | 24,505 | 31,143 | 36,591 | 35,391 | 35,091 |
Capital WIP | 4,691 | 248 | 500 | 1,500 | 3,000 |
Total Investments | 6,402 | 6,527 | 6,527 | 6,527 | 6,527 |
Curr. Assets, Loans&Adv. | 1,360 | 2,053 | 514 | 2,329 | 4,927 |
Inventory | 105 | 138 | 183 | 220 | 264 |
Account Receivables | 560 | 715 | 880 | 1,056 | 1,268 |
Cash and Bank Balance | 275 | 537 | -1,213 | 389 | 2,732 |
Loans and Advances | 420 | 663 | 663 | 663 | 663 |
Curr. Liability & Prov. | 724 | 918 | 1,160 | 1,380 | 1,644 |
Curr. Liability & Prov. | 668 | 859 | 1,100 | 1,321 | 1,585 |
Account Payables | 56 | 60 | 60 | 60 | 60 |
Provisions | 636 | 1,135 | -646 | 949 | 3,283 |
Net Current Assets | 36,598 | 39,411 | 42,972 | 44,367 | 47,901 |
Appl. of Funds | 7,916 | 7,918 | 7,198 | 7,198 | 7,198 |
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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