EUR 120.00 For Business Accounts Only

MOSL: Morning India (24/April/19): 1. Lemon Tree Hotels (IC); 2. Maruti Suzuki (New Alto 800 launch); 3. Lupin (OAI leads to ‘Status quo’ from regulatory perspective); 4. ACC; 5. AU Small Finance; 6. Coromandel

MOrning India (24/April/19): 1. Lemon Tree Hotels (IC) - The Eagle Eyed; 2. Maruti Suzuki (New Alto 800 launch); 3. Lupin (OAI leads to ‘Status quo’ from regulatory perspective); 4. ACC; 5. AU Small Finance; 6. Coromandel Intl; 7. Automobiles

 

Today’s top research idea

Lemon Tree Hotels (Initiating Coverage): The Eagle Eyed; Squeezing opportunities in demand-dense, high ARR markets

• With the Indian hospitality industry at the cusp of an upcycle, Lemon Tree (LEMONTRE) seems all set to cash in on the upswing. It plans to increase owned rooms by 1.5x; of the incremental rooms 68% will come in high demand and high ARR market.
• After establishing itself as a leading player in the mid-priced hotel segment, the company is now leveraging the same to add rooms through management contract route. ARR growth in existing hotels will directly flow to the EBITDA and owned hotels coming up in high ARR markets should also aid in EBITDA growth as cost of operating hotel does not increase proportionately to ARR increase.
• We expect LEMONTRE to deliver revenue/EBITDA CAGR of 29%/45% over FY18-21. We ascribe one-year forward EV/EBITDA of 22x and arrive at a target price of INR90. Initiate coverage with Buy rating.

Piping hot news

RBI announces another Rs 25k-crore OMO in May

The Reserve Bank Monday announced a Rs 25,000-crore liquidity injection through purchase of government securities in May. The purchase, called as open market operations (OMOs), will be undertaken in two equal tranches with the first one on May 2, the central bank said in a statement.