Lemon Tree Hotels (LTH) incorporated in 1992 is engaged in the business of developing, owning, acquiring, renovating, operating, managing, and promoting hotels, motels, resorts, and restaurants. LTHL delivers differentiated yet superior service offerings, with a compelling value proposition.

LTHL opened its first hotel with 49 rooms in May 2004 and today, the company has a portfolio of 160+ hotels, which includes over 100+ operational hotels and more than 60 hotels set to open in India and internationally. Lemon Tree Hotels are located across metro regions, including the NCR, Mumbai, Kolkata, Bengaluru, Hyderabad and Chennai, as well as numerous tier I, II and III cities such as Pune, Ahmedabad, Chandigarh, Jaipur, Indore, Aurangabad, Udaipur, Vishakhapatnam, Kochi, Ludhiana, Thiruvananthapuram, Vijayawada etc.

On international front company opened its first hotel in Dubai in December 2019 and in Bhutan in February 2020. Currently company has many operating as well as many new hotels in pipeline in Nepal as well as Bhutan.

Lemon Tree group holds 3 companies i.e. Lemon Tree the holding company owns and operates 17 hotels + 1700 rooms and By FY28, the company plans to transfer all 100% owned assets to Fleur to recycle capital. The another is Fleur Hotels Pvt Ltd a 58.91% subsidiary and the Asset Owner. As of Q3FY24, it owns 24 hotels, and 4.0k+ rooms, with APG as strategic partner (41.09% shareholding). By/before CY28, the company plans to list it via IPO or REIT (Lemon Tree will remain the majority shareholder). And the last is Carnation Hotels Pvt Ltd - 100% subsidiary and a Third Party Asset Manager /Franchiser. Company manages /franchises 55 hotels, 3.6k+ rooms and By/before CY28, company plans to manage/franchise 260+ hotels, and 15k+ rooms and propose to merge with Lemon Tree Hotels.

Company has various brands to target audiences at each level. Starting with Keys Lite By Lemon Tree Hotels and Red Fox by Lemon Tree Hotels under Economy category. It has Lemon tree Hotels and Keys Select in Midscale segment, Keys Prima By Lemon Tree Hotels and Lemon Tree Premier in Upper scale segment and Aurika Hotels & Resorts in Upscale segment.

Currently company has 10,125 rooms and 107 hotels in operation and already set up for 4,036 rooms and 61 hotels in pipeline. Company has also planned to spend 1,006 Crs for developing two properties - Aurika, Mumbai International Airport (669 Rooms) and Lemon Tree Mountain Resort, Shimla (69) Rooms. Company has also planned new projects in pipeline for various brands which is as follows :

Aurika - 2 Hotels - 242 Rooms

Lemon Tree Premiere - 6 Hotels - 479 Rooms

Lemon Tree Hotel - 37 Hotels -2484 Rooms

Red Fox Hotel - 1 Hotel - 50 Rooms

Keys - 9 Hotels - 491 Rooms

Fundamentals:

Quarterly Results of Q1FY25:

Company has reported Net Sales of Rs 268.02 crore in June 2024 up by 20.59% from Rs. 222.26 crore in June 2023. Its Quarterly Net Profit was at Rs. 19.81 crore in June 2024 down 15.56% from Rs. 23.46 crore in June 2023. Company’s EBITDA stands at Rs. 117.91 crore in June 2024 up 10.36% from Rs. 106.84 crore in June 2023. Lemon Tree EPS has decreased to Rs. 0.25 in June 2024 from Rs. 0.30 in June 2023.

Company’s total rooms reached 10125 up by 19% YoY, its Average Room Rate increased by 9% and reached to 5686 on YoY basis in Q1Fy25. Its RevPAR also increased by 4% to 3788 (Rs.) on QoQ basis while its occupancy also saw a drop of 360bps and reached 66.63% in Q1Fy25.

Company’s saw a growth of 22% in its total management fees which includes 21% growth in Management / Franchise Fees from 3rd party owned hotels and 23% growth in Management Fees from Fleur Hotels.

Key Updates:

• Lemon tree has recently signed its latest hotel – Lemon Tree Hotel, Udaipur. The property, which shall be managed by Carnation Hotels Private Limited, a wholly-owned subsidiary of Lemon Tree Hotels Limited, is expected to open in FY 2027.
• It has also signed – Keys Select by Lemon Tree Hotels, Srinagar, which shall be managed by Carnation Hotels Private Limited, a wholly-owned subsidiary of Lemon Tree Hotels Limited, is expected to open in FY 2026. Keys Select by Lemon Tree Hotels, Srinagar will feature 40 well-appointed rooms, two restaurants, a meeting room, and a fitness center. The Sheikh Ul Alam International Airport is about 9 kms from the property. The hotel is also well connected by roadways for both public and private transport.
• Company has also announced the opening of Lemon Tree Resort Mussoorie. This managed hotel is the tenth property of the group in Uttarakhand. This welcoming resort will feature 44 well-appointed rooms and suites, Citrus Café – a multi-cuisine coffee shop and other public areas. The resort will also feature a well-equipped fitness centre and banquet facility in the second phase.
• Recently company has also signed new properties in Mumbai, Pune and Nashik in Maharashtra which shall be managed by Carnation Hotels Private Limited, a wholly-owned subsidiary of Lemon Tree Hotels Limited and all are expected to open in Fy26.
• Company has also signed new property in Gir, Gujarat which shall be managed by Carnation Hotels Private Limited, a wholly-owned subsidiary of Lemon Tree Hotels Limited and it is expected to open in FY30. Lemon Tree Hotel, Gir, Gujarat will feature 80 well-appointed rooms, a restaurant, banquet hall, meeting room, a swimming pool and a spa.
• Company has also signed new properties in various locations such as Ayodhya, Amritsar and Ujjain.  All shall be managed by Carnation Hotels Private Limited, a wholly-owned subsidiary of Lemon Tree Hotels Limited.
• Lemon Tree Hotels Ltd. has recently announced its latest signing Aurika, Surat in Gujarat under its upscale brand, Aurika Hotels & Resorts. The property is slated to open in FY 2030 and shall be operated by Carnation Hotels Pvt. Ltd., a subsidiary and the management arm of Lemon Tree Hotels Ltd. Aurika, Surat will feature 175 aesthetically designed rooms and suites, along with Mirasa, the all-day dining restaurant, banquet facilities including Ekaara, the ballroom and Aurum, the boardroom, a stunning swimming pool and a rejuvenating spa
• Lemon Tree Hotels Limited has also opened a resort in Somnath- Lemon Tree Resort, Somnath. The property is being operated under the franchise division of Lemon Tree Hotels. The resort is conveniently located just 5 minutes’ walking distance from the Veraval beach and just 30 minutes away from the Somnath Temple. This comfortable resort features 52 well-appointed rooms and suites, Citrus Café – a multi-cuisine coffee shop and an expansive outdoor space to meet all discerning guests’ event needs. For recreation, the resort offers a wellequipped fitness center, and a refreshing swimming pool.
• Lemon Tree Hotels also announced the signing of two new properties – Lemon Tree Hotel, Arpora, Goa and Keys Lite by Lemon Tree Hotels, Pathankot. Both the properties shall be managed by Carnation Hotels Private Limited, a wholly-owned subsidiary and the management arm of Lemon Tree Hotels Limited, and are expected to open in FY 2026.
• The company has also the opened Lemon Tree Hotel, Centre Point, Jamshedpur, the first property of the group in Jharkhand. This comfortable hotel features 42 well-appointed rooms, Slounge – a hip recreation bar, Republic of Noodles – the award winning Pan-Asian restaurant, a banquet, a fully equipped fitness center and other public areas.
• On international front, Lemon Tree Hotels Limited announced its foray into the stunning country of Nepal with the opening of Lemon Tree Premier, Budhanilkantha, Kathmandu. And Tigerland Safari – A Lemon Tree Resort, Chitwan, Nepal.

In last 3 Years the stock gave a return of 124% as compared to the rise of Sensex and Nifty in the same period.

The company has set a target of 20K+ rooms with a 70%+ Asset light portfolio by 2028 and it is is targeting to open 300+ hotels with 65% retail share target by 2028. Looking at the expansion plans and continuous new hotel additions by the company under various segment, Lemon tree is well positioned to enjoy healthier cash flows and profitability going forward. Government’s push for growth in tourism may fuel the company’s future expansions in various locations across the country. So, one can invest in this company at this Price for higher returns in long term period. 

HET ZAVERI

info@smartinvestment.in

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