Lemon Tree's (LTH) business was severely affected by lockdown in Q1FY21. Revenues fell 71.1% YoY to Rs. 40.7 crore (vs. I-direct estimate: Rs. 43.7 crore) as only 71% of its inventory was operational. Occupancy in operational hotels was at 40.4%, leading to average occupancy of 28.9% for the quarter. Average room rates were also down 34.4% YoY to Rs. 2626/room. Key demand segments for business were Indians returning from abroad, global IT majors for their business continuity and on duty doctors & paramedical staffs. Total expenses were at Rs. 36.3 crore in Q1FY21, down 62.2% YoY vs. Rs. 96.2 crore in Q1FY20. EBITDA fell 90.2% YoY from Rs. 44.8 crore in Q1FY20 to Rs. 4.4 crore in Q1FY21 (vs. I-direct estimated EBITDA loss of Rs. 3.9 crore). Resultant EBITDA margin was at 10.7% vs. 31.8% reported last year. With a sharp increase in interest costs (up 57.5% YoY to Rs. 48.7 crore), net loss was at Rs. 60.5 crore (vs. I-direct estimated net loss of Rs. 50.2 crore).
Valuation & Outlook
The outlook would remain challenging with recoveries not expected before FY22E. LTH's management expects the ongoing crisis to lead to 15-20% of room inventory getting wiped out, auguring well for the company in the long run. However, near term challenges w.r.t. weak industry dynamics, high D/E and expected equity dilution compel us to maintain HOLD rating with revised target price Rs. 26/share (SOTP based valuation).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_LemonTree_Q1FY21.pdf
Shares of Lemon Tree Hotels Ltd was last trading in BSE at Rs.26.7 as compared to the previous close of Rs. 24.3. The total number of shares traded during the day was 144464 in over 462 trades.
The stock hit an intraday high of Rs. 26.7 and intraday low of 24.7. The net turnover during the day was Rs. 3740900.