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Last Updated : Mar 26, 2018 10:00 AM IST | Source:

Lemon Tree Hotels IPO opens: Should you subscribe?

The price band of the issue is Rs 54-Rs 56 per equity share of the company of face value of Rs 10 each.

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Lemon Tree Hotels, one of the largest hotel chains in the mid-priced hotel segment, is coming out with its initial public offering on March 26, 2018. The issue will close on March 28, 2018.

The price band of the issue is Rs 54-Rs 56 per equity share of the company of face value of Rs 10 each.

The IPO consists an offer for sale of up to 18,54,79,400 equity shares of the company.

Equity shares are proposed to be listed on BSE and NSE.

Kotak Mahindra Capital Company, CLSA India, JP Morgan India and YES Securities (India are the book running lead managers to the issue. The registrar to the issue is Karvy Computershare.

The bid can be made for a minimum lot of 265 equity shares and in multiples of 265 equity shares thereafter.

Brokerage: Hem Securities | Rating: Avoid

The company is a hospitality platform with operations and competencies spread across the hotel value chain. Co’s operations range from acquiring land to owning, developing, managing and marketing hotels.

Although co is leading mid-priced hotel chain with a differentiated business model & has strategically positioned in key geographical areas but, as company was loss making since FY’15 & has turned around only in 9MFY18, hence limited track record of profit making doesn’t instil confidence in company at present level. Hence, we recommend avoid on issue.

Brokerage: Choice Broking | Rating: Subscribe with caution

At the higher price band of Rs 56 per share the company's share is valued at an FY17 P/E multoiple of 100.4 multiple, which is at premium to the peer average of 28.7 multiple.

The key risk and concerns include, subdued economic growth, slow expansion in the occupancy level, poor ramp of new hotels, increased competition and rise in operating expenses.

Brokerage: ICICIdirect| Rating: Avoid

We recommend avoid on offering, based on high capex oriented nature of expansion, low RoCE, higher competition in the mid-scale segment.

The company’s development cost per room across its three brands are lower than industry. Further, focus on domestic guests, operating efficiency & lowemployee cost have enabled company to keep its operational cost lower, margins higher than peers and compete effectively on pricing.
First Published on Mar 26, 2018 09:45 am
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