MOSL: LEMON TREE HOTELS (Buy)-Retail demand drives recovery
LEMON TREE HOTELS: Retail demand drives recovery
(LEMONTRE IN, Mkt Cap USD0.5b, CMP INR50, TP INR70, 41% Upside, Buy)
- Revenue grew 2x YoY in 2QFY22, led by robust RevPAR growth of 80% on account of a 19pp improvement in occupancy. The latter was driven by a sharp recovery in retail demand and 14% rise in ARR. EBITDA surged 4.1x YoY benefitting from operating leverage.
- Factoring in better demand visibility, we increase our FY22E EBITDA estimate by 16% (on low base), but have maintained our FY23 EBITDA estimates. We maintain our Buy
In line performance
- Revenue grew 2x YoY (+2.3x QoQ) to INR969m (est. INR953m) in 2QFY22, driven by higher ARR as well as occupancy. ARR surged by 14% YoY to INR3,028 and occupancy improved by 19pp to 51%. RevPAR grew 80% YoY to INR1,544.
- RevPAR jumped by 2.2x QoQ driven by a 21pp increase in the occupancy rate. ARR grew by 28%.
- EBITDA grew by 4.1x YoY to INR339m (est. INR339m, v/s an operating loss of INR1m in 1QFY22).
- Adjusted loss stood at INR208m in 2QFY22 v/s a loss of INR371m in 2QFY21.
- Keys Hotels generated a revenue of INR71m (+1.9x QoQ and +31% YoY), with an EBITDA of INR9m (+200% YoY) in 2QFY22. It operated at 29.8% occupancy (+740bp YoY), with an ARR of INR2,053 (-3% YoY).
- Revenue/EBITDA surged by 58%/2.7x YoY in 1HFY22.
Lemon Tree Hotels Ltd is an India-based company, which operates a chain of upscale business and leisure hotels. The Company is engaged in acquiring land, building, leasing, owning, managing and marketing hotels. The Company offers three brands across various levels, that include Aurika Hotels and Resorts in Upscale; Lemon Tree Premier and Keys Prima in the upper midscale segment; Lemon Tree Hotels and Keys Select, in the midscale segment; and Red Fox Hotels and Keys Lite by Lemon Tree Hotels in the economy segment. Lemon Tree hotels are located across India, in metro regions, including the Mumbai, Bengaluru, Kolkata, Hyderabad and Chennai, as well as tier I and tier II cities such as Pune, Ahmedabad, Chandigarh, Jaipur, Udaipur, Indore, Vijaywada and Aurangabad.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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