Lemon Tree Hotels launches hotel in Dwarka, Gujarat; stock advances 10%

Net loss of the company came in at Rs 41.87 crore for Q1FY21.
Shares of Lemon Tree Hotels zoomed as much as 9.5 per cent to Rs 29.25 apiece on the BSE on Wednesday after the company announced its debut in Dwarka, Gujarat, with the launch of the 109 key hotel - Lemon Tree Premier, Dwarka. 

"The hotel features 109 well-appointed rooms and suites, a multi-cuisine vegetarian coffee shop-Citrus Café, banquet facilities, Conference facility Spa, etc. The hotel shall be managed by Carnation Hotels Private Limited, a subsidiary, and the hotel management arm of Lemon Tree Hotels Limited," the company said in its press release.

For the quarter ended June 2020, Lemon Tree Hotels reported a weak set of numbers due to the Covid-19-induced lockdown. The company's revenue from operations declined 71.1 per cent year-on-year (YoY) to Rs 40.7 crore. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) stood at Rs 7.5 crore, down 83.8 per cent against Rs 46 crore in the year-ago period. Its pre-tax loss stood at Rs 67.7 crore against Rs 1.4 crore in Q1FY20. Net loss of the company came in at Rs 41.87 crore as against the net loss of Rs 1.67 crore in the corresponding quarter of the previous fiscal. CLICK HERE TO VIEW PRESS RELEASE

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. 

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel