ICICI Securities research report on Lemon Tree Hotels
As of Sep’24, Lemon Tree Hotels (LEMONTRE) has 10,318 operational keys across 112 hotels. The company has an aggressive room expansion plan for H2FY25–FY29 with an incremental 5,220 keys – should take overall operational keys to 15,538 by FY29–30E. In the near term, FY25E operations may remain constrained by ongoing renovations in its Keys portfolio and other owned/leased hotels. We expect LEMONTRE to deliver revenue and EBITDA CAGRs of 22% over FY24–27E as Aurika, its Mumbai airport hotel, fully stabilises, and renovated rooms and management contract revenues see an uptick.
Outlook
As earnings scale up in the medium term, the company expects debt levels to gradually dip over the next 3–4 years (debt of INR 19.1bn, as of Sep’24). Retain BUY; SoTP-based TP of INR164 (based on 23x Sep’26E EV/EBITDA) unchanged.
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