Buy Lemon Tree Hotels; target of Rs 110: ICICI Direct

ICICI Direct's research report on Lemon Tree Hotels

Promoted by Patanjali Keswani, Lemon Tree is the largest hotel chain in the mid-priced segment in India. It operates 8,489 rooms in 87 hotels across 54 destinations in India and abroad under brands like Aurika (premium), Lemon Tree premier, Lemon Tree (midscale), RedFox (economy) and Keys. The favourable location of its properties in prominent business and tourist districts supports revenue growth prospects and reduces concentration risk • Post completion of expansion, LTHL will be operating ~10,462 rooms in 105 hotels across 64 destinations, in India and abroad by FY24E.

Outlook

We retain BUY rating on this stock. We value the company at Rs 110/share (unchanged) on an SOTP basis (i.e. implied value at 28x FY24E EV/EBITDA).