Lemon Tree Hotels Ltd shares rise over 2% 82 on the BSE in the opening trading session of Monday. The hotel stock has been in an uptrend for the past few sessions and has become a multibagger, rising almost 105% in a span of one year, reaching its all-time high.
The hospitality sector has been in the limelight and has been seen to outperform the broader markets. The hotel sector’s outperformance in FY12 was largely driven by the Covid restrictions by Indian leisure tourists who would otherwise travel abroad.
According to analysts, the favorable location of Lemon Tree properties in key business and tourism districts supports revenue growth prospects and minimizes concentration risk.
Brokerage and research firm ICICI Securities said, “With the opening of international borders to foreign tourists, we also expect a substantial improvement in the hotel business in major cities like Mumbai and Delhi. Lemon Tree is likely to be a major gainer. ” A note from earlier this month.
Promoted by Patanjali Keswani, Lemon Tree (LTHL) is the largest hotel chain in the mid-price segment in India. It operates 8,497 rooms in 87 hotels in 54 destinations in India and abroad under brands such as Aurica (Premium), Lemon Tree Premier, Lemon Tree (Midscale), Redfox (Economy) and Keys. multibagger stock Over 72% so far in 2022 (YTD).
The company plans to add 738 rooms (669 rooms in Mumbai, 69 rooms in Shimla) in the next two years with total capital expenditure. 1,006 crores. After the completion of the expansion, LTHL will operate approximately 10,462 rooms in 105 hotels across 64 destinations in India and abroad by FY14.
ICICI Securities expects the company’s operating margin to grow to 50% (the highest in the industry) in the next one year. “The company is well positioned to capture the unorganized market share owing to the upcoming room supply slowdown in the wake of the current crisis. We believe that the company’s large asset base, strategic partnership and financial flexibility will continue to support the liquidity profile as and when needed,” it added in its note dated September 7, 2022.
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