Analysts at Edelweiss Securities, in its result review note, said that from the liquidity perspective, Lemon Tree Hotels has sufficient cash to meet its total expenses including debt obligations for the next four quarters assuming the worst-case scenario.
"In addition to the Rs 2.3 billion of liquidity (including Rs 1.7 billion from APG), Lemon Tree has confirmed its plans for a rights issue, which will shore up its coffers by Rs 1.5 billion. There is also an option of raising another Rs 1.3bn from APG. Putting in perspective its monthly opex of nearly Rs 100 million, liquidity is ample," the brokerage said.
It has a "BUY" rating on the stock with the target price of Rs 26.
Analysts at ICICI Securities, on the other hand, note that the outlook would remain challenging with recoveries not expected before FY22E.
"Lemon Tree Hotel’s management expects the ongoing crisis to lead to 15-20 per cent of room inventory getting wiped out, auguring well for the company in the long run. However, near term challenges with respect to the weak industry dynamics, high D/E, and expected equity dilution compel us to maintain HOLD rating with a revised target price of Rs 26/ share (SOTP based valuation)," they wrote in a note issued on August 11.
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