Buy Lemon Tree Hotels, target price Rs 155: HDFC Securities

HDFC Securities has buy call on Lemon Tree Hotels with a target price of Rs 155. The current market price of Lemon Tree Hotels is Rs 129.35. Lemon Tree Hotels, incorporated in 1992, is a Mid Cap company with a market cap of Rs 10235.03 crore, operating in Tourism & Hospitality sector.

Lemon Tree Hotels' key products/revenue segments include Income from Rooms, Restaurants & Other Services and Other Operating Revenue for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 355.80 crore, up 24.91% from last quarter Total Income of Rs 284.84 crore and up 22.32% from last year same quarter Total Income of Rs 290.87 crore. The company has reported net profit after tax of Rs 79.76 crore in the latest quarter.

The company's top management includes Mr.Patanjali Govind Keswani, Mr.Niten Malhan, Mr.Willem Albertus Hazeleger, Mr.Aditya Madhav Keswani, Ms.Freyan Jamshed Desai, Mr.Paramartha Saikia, Ms.Smita Anand, Mr.Praveen Garg, Mr.Sanjiv Nandan Sahai. The company has Deloitte Haskins & Sells LLP as its auditors. As on 31-12-2024, the company has a total of 79 crore shares outstanding.

Investment Rationale
Lemon Tree Hotels' current net debt is ~Rs 17 billion, which is a key monitorable in HDFC Securities' view. Lemon Tree expects to become debt-free with the help of listing of Fleur hotels (asset-heavy subsidiary) in the next 2-3 years. The brokerage expects Lemon Tree Hotels to continue to benefit from buoyant discretionary spending and demand tailwinds of the sector. They largely maintain the estimates for Lemon Tree and continue with a BUY rating and an unchanged target price of Rs 155 (17x FY27 EV/EBITDA).

Promoter/FII Holdings
Promoters held 22.77 per cent stake in the company as of 31-Dec-2024, while FIIs owned 20.01 per cent, DIIs 20.79 per cent.