Buy Lemon Tree Hotels For Target Price Of Rs. 64: Angel One

Indian indices in trade on December 16, 2021 have ended on a flattish note with an upward bias, with Nifty still holding below 17,250 levels. Bank Nifty and broader markets however saw selling pressure.

Meanwhile, leading brokerage firm Angel One as part of its top December 2021 picks has given a 'Buy' call on the stock of Lemon Tree Hotels for a price target of Rs. 64. The last traded price of the hotel scrip has been Rs. 47, implying potential upside of over 36 percent.

Rationale for a ‘Buy' on Lemon Tree Hotels

While occupancy levels dropped to 21.5% in April due to the lockdowns it had improved to 34.6% in June. We expect occupancy levels to revert to Q4FY21 levels in the current quarter and improve further in 2HFY22 thus driving revenue and profitability back to pre Covid levels in FY23.

Lemon Tree Hotels performance

The company reported a 55.7% QoQ de-growth in revenues for Q1FY22 to Rs. 42.2 Cr. due to sharp drop in occupancy levels to 29.6% from 55.8% in Q4FY21 while ARR declined by 1% QoQ. This led to a sharp drop of 58% in RevPAR sequentially. As a result, the company posted an EBIDTA loss of Rs. 0.1 Cr. for the quarter and a net loss of Rs. 59.8 Cr. for the quarter.

About Lemon Tree Hotels

Lemon Tree Hotels is the largest hotel chain in the mid-priced hotels segment and third largest overall. The entity operates 87 hotels in 54 destination sites with approximately 8,500 rooms.

Disclaimer:

The stock has been picked from the brokerage report of Angel One-Top picks for December 2021. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.