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Anand Rathi Report
We expect Lemon Tree Hotels Ltd.'s Q2 FY24 to be on similar lines as Q1, as it sees demand rising. Its average room rate would grow ~10% YoY.
We expect H2 FY24 to be very strong for the industry and the company due to the World Cup, the festival season, return of international travellers, ~80% occupancy and higher ARRs.
Lemon Tree company is set to open its largest hotel, Aurika Mumbai (Mumbai International Airport, 669 rooms) by end-October 2023, ~14% of its current inventory.
We expect it to report 26.3%/27% revenue/Ebitda compound annual growth rates over FY23-FY25.
Hence, factoring in all the above, we raise our 12-month target price to Rs 150 (from Rs 110 earlier), valuing the stock at 20 times FY25e enterprise value/ Ebitda.
Risks: Slow-down in the economy would curtail demand; vulnerable to external factors: terrorist attacks, epidemics, etc.
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