Nearly 80% upside target! Lemon Tree Hotels shares’ target price raised. Key triggers
Domestic brokerage house and research firm ICICI Securities has raised its target price on Lemon Tree Hotels to ₹132 a piece from ₹125 a piece earlier, suggesting a potential 80 per cent upside over its Friday’s closing price of ₹73.75 a piece.
LTH clocked its best-ever quarter in Q3FY23, and with the company having achieved 9MFY23 revenue and EBITDA of ₹6.2 billion and ₹3.1 billion respectively. The brokerage believes that LTH is on track to meet its FY23 guidance of revenues growing 100 per cent on-year to ₹8.0 billion at an EBITDA margin of 50 per cent.
“While FY23 has been the year of recovery, the focus from FY24 will be on industry demand CAGR over FY23-27E of over 10 per cent versus supply CAGR of 4-5 per cent, company’s plans to add another 2,800 keys by 25 March to take total operational keys to over 11,000, opening of the 669 keys owned Aurika Mumbai Airport hotel in H2FY24 and focus on organic debt reduction from FY25E as pending capex of ₹5 billion largely for Mumbai Airport hotel is completed by 24 March,” the note stated.
The brokerage retained its FY23-24E estimates and raised its FY25E revenue and EBITDA estimates by 18 per cent factoring in faster occupancy ramp-up for Aurika Mumbai Airport hotel.
Key risks, as per the brokerage, include prolonged impact of Covid on occupancies and room rates and cost inflation.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.