Shares of a hospitality company gained more than 12 percent in the past five days to reach a 52-week high of ₹ 108.50 apiece on the National Stock Exchange (NSE). This happened after the company announced that it has signed two licence agreements for properties in Bhubaneswar and Kasauli. Its shares settled at ₹ 107.45.
According to an exchange filing, Lemon Tree Hotels has signed Licence Agreements for two properties in Bhubaneswar and Kasauli under the Company’s brands “Lemon Tree Hotel” and “Lemon Tree Mountain Resort”, respectively, in line with its asset-light growth strategy.
Lemon Tree Hotel, Bhubaneswar, Odisha is expected to be operational by Q4 of FY 2025. This property is merely 12 km away from the Biju Patnaik International Airport, Bhubaneswar and just 10 km away from the railway station.
Meanwhile, Lemon Tree Mountain Resort, Kasauli, Himachal Pradesh is expected to be operational by Q3 of FY 2026. This property is about 56 km away from the Chandigarh railway station and 10 km away from the Kalka Railway Station.
Lemon Tree Hotels is the largest mid-priced and the third-largest overall hotel chain in India. It operates in the upscale segment and in the mid-priced sector, consisting of the upper-midscale, midscale and economy segments. It delivers differentiated yet superior service offerings, with a value-for-money proposition.
ICICI Securities has maintained a buy rating on the stock with a target price of ₹ 137.00. This translates to an upside of 28.28 percent, compared to its share price of ₹ 106.80 apiece at 12:07 PM on Wednesday.
The company’s share price increased by 174 percent in the past two years to deliver multibagger returns. Therefore, if an investor had invested ₹ 1 lakh in the company’s shares one year ago, the value of their holdings would have been ₹ 2.74 lakhs today!
With a market capitalization of ₹ 8,506 crores, Lemon Tree Hotels is a small-cap company. It has a low return on equity of 13.60 percent and a high debt-to-equity ratio of 2.55. Its shares were trading at a price-to-earnings ratio (P/E) of 68.01, which is higher than the industry P/E of 37.66, indicating that the stock might be overvalued as compared to its peers.
Retail investors hold a 40.85 percent stake in the company, followed by foreign institutions with 25.48 percent, promoters with 23.60 percent, mutual funds with 9.86 percent and other domestic institutions with 0.21 percent.
Written by Simran Bafna
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