Lemon Tree Hotels Ltd. share price target

Lemon Tree's (LTH) business was severely affected by lockdown in Q1FY21. Revenues fell 71.1% YoY to | 40.7 crore (vs. I-direct estimate: | 43.7 crore) as only 71% of its inventory was operational. Occupancy in operational hotels was at 40.4%, leading to average occupancy of 28.9% for the quarter. Average room rates were also down 34.4% YoY to | 2626/room. Key demand segments for business were Indians returning from abroad, global IT majors for their business continuity and on duty doctors & paramedical staffs. Total expenses were at | 36.3 crore in Q1FY21, down 62.2% YoY vs....

10 August 2020 Lemon Tree Hotels (LEMONTRE) cost saving initiatives have aided in achieving positive EBITDA (higher than est.). This is commendable in our view, especially at a time when hotel players have either reported or are likely to post EBITDA loss (for players yet to announce results). Although EBITDA was above our estimates, we have maintained our FY21/22E estimates as 1QFY21 is not expected to contribute materially to FY21 EBITDA. We have a rating on the stock with TP of INR33. 1QFY21 revenue was down 71% YoY to INR407m (v/s est. ARR declined 34% YoY to INR2,626, while occupancy decreased 48.7pp to 28.9%, leading to RevPAR drop of 76% YoY to INR759. EBITDA plunged 90% YoY to INR44m (v/s est. INR3m) while Adj. loss stood at INR419m (v/s loss of INR17m last year). On same hotel basis (excluding hotels, which were commissioned over the past 12 months i.e.

Tourism was the first sector that took a hit due to outbreak of the pandemic and is expect to be among the last to recover. Business in April was down 76% YoY and 70% YoY in May. Business and Leisure travel are not expected to normalize for few quarters. Occupancies in the lockdown came from rooms occupied by quarantine or corporate guests, doctors and healthcare workers. We model occupancy of 52%/63% and ARR of |4080/|4410 in FY21E/FY22E. LTH has taken measures to curtail costs, by taking salary cuts, re-negotiating contracts, reducing repairs costs, reduction in power costs,...

The ongoing coronavirus outbreak has had a severe impact on the hotel bookings in India from Feb-20 onwards with massive forward booking cancellations across cities. This in turn has eroded the ability of hotels across India with heavy loss of business during this peak season time. The extent of this lost business has primarily been seen across all major tourist and business destinations and we expect the situations to remain severely weak with individuals cancelling or deferring their travel plans and thousands of companies adopting the work from home' and no travel' policies. This...

Lemon Tree Hotels Ltd.'s (LTH) Q3FY20 result was a mixed bag as net sales was muted owing to weak performance of new hotels, while cost saving aided healthy margins improvement. Net sales increased by 39.2% YoY to Rs 1,996 mn mainly driven by 4% increase in ADR. EBITDA came in at Rs 812 mn, up by 65.7% YoY and EBITDA margin stood at 40.7%, improved by 649 bps YoY. The company reported net profit of Rs 122 mn down by 2.2% YoY. The company's new acquired venture Keys Hotels performance...

Lemon Tree Hotels reported a strong set of Q3FY20 numbers. Revenues for the quarter increased 39.2% YoY to | 199.6 crore (I-direct estimate: | 189.6 crore). The strong topline growth was driven by ~45% increase in the number of owned/leased rooms and 58% rise in managed room portfolio. While RevPAR growth, on an overall basis, was at 1.9% for the quarter, RevPAR growth for the Lemon Tree portfolio (ex-keys) was at a healthy 7.5% YoY. Reported EBITDA for the quarter was at | 81.2 crore (I-direct estimate: | 64.1 crore) with EBITDA margins of 40.7% (I-direct estimate: 33.8%). On a...

17 February 2020 LEMONTRE reported a strong performance at its existing hotels, where RevPAR growth of 7.5% YoY led to a 19% YoY increase in EBITDA. EBITDA performance was mainly driven by new hotels (absent in the base quarter) as they formed 46% of incremental EBITDA. For FY20, we cut our revenue estimate by 6% (to factor in the 16% miss to our estimate in 3QFY20) but maintain our EBITDA estimate. For FY21/22, our estimates remain unchanged. inventory addition (absent in base quarter), contribution from Keys Hotels acquisition, and ARR growth. Reported EBITDA grew 66% YoY to INR812m 48% YoY to INR725m. Adj. PAT declined 2% YoY to INR122m. For 9MFY20, revenue/like-to-like EBITDA/PAT growth stood at 24%/25%/(59%). ARR was up 4% YoY at INR4,644 in 3QFY20; occupancy declined by ~150bp YoY to 71.3%. However, on a same-hotel basis, ARR grew 5.4% YoY with occupancy up ~150bp YoY at 76.

We initiate coverage on Lemon Tree Hotels Ltd (LTH) with a BUY rating and TP of Rs85 based on 26x EV/EBITDA on FY22E. We believe LTH's 1) Leadership in mid-market hotel segment in the domestic market, 2) Robust pipe line of inventory addition, 3) Focus on asset light business model, 4) Inorganic expansion through acquisition of Keys Hotels and 5) Foray into upscale segment through Aurika brand would be key catalysts for earnings growth. We expect the company to clock net sales/EBITDA/PAT CAGR of 19.4%/22.6%/36.8% over FY19-22E. Our earlier thesis of domestic hotel industry to benefit from increasing occupancy owing to demand-supply mismatch, which will lead...

However, like-to-like EBITDA (adjusted for Ind-AS 116) was up only 12% YoY at INR404m, with the margin down 150bp YoY to 26.5%. The 13 November 2019 company reported a loss of INR22m in 2QFY20, as against a profit of INR57m in 2QFY19 due to lower other income and higher depreciation/interest. ARR increased 4.9% YoY to INR4,133 in 2QFY20; occupancy declined 350bp YoY to 74.8%. However, on a same-hotel basis, ARR was up 2.9% YoY, while occupancy was constant at 78.2%. Despite 19% revenue growth, like-to-like EBITDA (adjusted for Ind-AS) was up only 12% YoY as the recently commenced hotels are yet to stabilize and incurred additional cost amounting to INR22m (of which INR8m is non- recurring expense relating to training of employees, while the balance is attributed to wage increase and provident fund). During the quarter, although ARR of new hotels was higher (by 15%) than the old hotels, occupancy at the former was relatively low at 58.8%, restricting overall EBITDA growth.

8 July 2019 Hospitality The LEMONTRE board has approved the acquisition of Keys Hotels, owned by Berggruen Hotels Pvt. Ltd, for a cash consideration of INR4,710m (enterprise value INR6,050m) through its subsidiary Fleur Hotels. The acquisition will increase LEMONTREs managed rooms by 50% and owned/leased rooms by 24%, taking the total to ~7,800 rooms, which constitutes 15% of the mid-market room supply in the country (up from 11%). Currently, occupancy/ARR of Keys Hotels is 10%/25% lower than LEMONTRE. Therefore, post-acquisition, the company would control a significant chunk of the supply in the respective micro-markets (Whitefield & Electronic City in Bangalore and Pune), which would further aid ARR increase. Common corporate expenses for Keys Hotels in FY19 stood at INR150m, which management intends to reduce to INR20m in FY21. Thus, on an overall basis, management estimates Keys Hotel to generate EBITDA of INR510-590m (base and target case) in FY21 v/s INR203m in FY19. Thus, based on managements estimates, acquisition cost stands at 11.9x-10.3x FY21 EV/EBITDA.