About the stock::Promoted by Patanjali Keswani, Lemon Tree (LTHL) is the largest hotel chain in the mid-priced segment in India. It operates 8,300 rooms in 84 hotels across 52 destinations in India and abroad under brands like Aurika (premium),...
Performance set to improve sharply from H2FY22E onwards As the economy is now coming out of pandemic induced pain, LTH is also gradually moving to its full functionality with operational inventory rising from 71.5% in Q1 to 86.8% in Q2, 91.2% in Q3, 93.4% in Q4. Although improvement is getting visible in tourist destinations, a recovery in corporate travel may take at least five to six months due to ongoing work from home policy. We model occupancy of 60%, 69% and ARR of | 3930, | 4710 in FY22E, FY23E, respectively. LTH has taken measures to curtail costs, by taking salary...
As the economy is now coming out of pandemic induced pain, the company is also gradually moving to its full functionality with operational inventory increasing from 71.5% in Q1 to 86.8% in Q2 and 91.2% in Q3. Although, improvement is getting visible in tourist destinations, recovery in corporate travel will take at least eight to 12 months due to ongoing work from home policy. We model occupancy of 47%, 60% and ARR of | 3180, | 4455 in FY21E, FY22E, respectively. LTH has taken measures to curtail costs, by taking salary cuts, re-negotiating contracts, reducing repairs costs, reduction...
LEMONTREs 3QFY21 revenue grew 44% QoQ, led by 25% RevPAR growth. This was on the back of 10pp improvement in occupancy, but was offset by a 5% decline in ARR. EBITDA soared 142% QoQ on cost-saving initiatives. Factoring in the current demand scenario, particularly in business travel, we have lowered our FY21E EBITDA estimate by 12% and have largely maintained our FY22E/FY23E EBITDA estimates. We have a Buy rating on the stock with TP of INR50 per share....
Stringent cost control remains key for survival With re-opening of state borders, the company saw a recovery in demand. Operating inventory also increased from 71.5% in Q1 to 86.8% in Q2. This led to 17.1% QoQ growth in revenues for the quarter. Although some improvement would be visible, going forward, with gradual unlocking of economy meaningful recoveries will take at least 12-15 months. We model occupancy of 43%, 60% and ARR of | 3580, | 4210 in FY21E, FY22E, respectively. LTH has taken measures to curtail costs, by taking salary cuts,...
Revenue stood at INR476m (v/s est. INR452m) in 2QFY21, down 69% YoY. ARR declined 36% YoY to INR2,654, and occupancy declined by 42.4pp (to 32.4%). Thus, RevPAR plunged 72% YoY to INR859. EBITDA plummeted 83% YoY to INR83m (v/s est. INR90m and INR44m in 1QFY21). Adj. loss stood at INR371m (v/s loss of INR22m last year). On QoQ basis, RevPAR grew 13%, led by 350bp improvement in occupancy and 1% increase in ARR. Revenue/EBITDA grew 17%/91% QoQ. On same hotel basis (excluding hotels, which were commissioned over the...
Lemon Trees (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 companys 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 LTHs 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.
Healthy room growth, geographic diversion and improving mix of keys in demand dense higher ARR markets to drive strong growth. Led by the above factors, EBITDA is set to triple over FY19-23E from Rs 1.7bn to ~Rs 5bn. That said LTHLs rich valuation at 30/24 x FY20/21E EV/EBITDA leaves limited margin of safety. Valuation would look more expensive on proportionate ownership basis in subsidiaries (~75%). Lemon Trees (LT) 4QFY19 performance was in-line but weak with moderate 4% ARR growth. Reiterate Neutral with TP of Rs 72 (30x FY21E EV/EBITDA).
Higher cost at new hotels impacts EBITDA growth momentum: ARR during 4QFY19 grew 4% YoY (to INR4,405) with occupancy improvement of 32bp to 77.6% (on same hotel basis, occupancy improved 330bp to 80.7%). This, along with new hotels led to 14% revenue growth. However, recently launched LTP (Pune)/RFH (Dehradun) operating at ~33%/~50% occupancy in FY19 dragged EBITDA growth; operational expenses grew 8.3% of which 8% was due to commencement of new hotels. In FY19, ARR grew 7.3% YoY to INR4,180 with occupancy improvement of 48bp to 76.3%....
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