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Stocks to Buy | Lemon Tree Hotels Limited

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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.

Market Position and Expansion

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.

Financial Performance (4QFY24)

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.

Shareholding%: 

 

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

Key Financial Metrics

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

Future Projections and Targets

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.

Operational Metrics

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.

Cash Flow Analysis

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

Key Takeaways

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.

Other Financial Details:

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.

For All Disclaimers Click Here: https://bit.ly/3Tcsfuc

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