Lemon Tree's stock price has increased 100% in the past 1 year

12 Sep 2022 , 02:16 PM

Shares of Lemon Tree Hotels hit a three-year high of Rs82.65 during the BSE’s intraday session on Monday, rising 3% on the back of strong trading. Over the past two weeks, the stock has increased by 21.5%. Lemon Tree Hotels operate in the upper-midscale, midscale, and economy segments of the mid-market, which includes both posh and mid-market categories.

The stock has risen 106% over the past year, outpacing the 3% growth of the S&P BSE Sensex. Since April 2019, the price has not been this high. The stock is now trading close to the Rs91 record high that it attained on April 23, 2018. In comparison to the 0.72 % increase in the S&P BSE Sensex at 10:13 am, Lemon Tree Hotels traded 2% higher at Rs81.80. 4.38 million equity shares, or 0.55 % of the company’s total equity, were traded on the NSE and BSE together.

The Lemon Tree Hotel, Hubli, Karnataka, was launched by Lemon Tree Hotels last month. By May 2023, this facility is anticipated to be open for business. Carnation Hotels Private Limited, a division, and management arm of Lemon Tree Hotels will oversee operations. The hotel business has experienced a resurgence as a result of the vaccination campaign’s growing momentum, an improvement in travel demand nationwide, reducing Covid-19 instances, the lifting of travel restrictions nationwide, as well as pent-up travel demand.

The first effects of the pandemic caused a decline in average daily rate (ADR) and occupancy in FY20, which peaked in FY19. Despite frequent Covid waves, average room rate (ARR) and occupancy quickly recovered in FY22. By the end of CY22 and the middle of CY23, respectively, occupancy and ARR are predicted to reach Pre-Covid levels, according to HVS Anarock.

The management of Lemon Tree Hotels claimed that the business is now on the verge of the next upswing since occupancy is anticipated to recover to pre-COVID levels of 70% or more by mid-FY23 and that the industry is currently seeing significant expansion.

We will greatly profit from the growing popularity of corporate travel because more than 85% of the company’s portfolio is comprised of business hotels. Consequently, on the strength of increased ARRs, higher occupancy, and favorable cost dynamics, we anticipate delivering robust growth in revenue and a considerable expansion of net EBITDA margin. The management of the firm stated in the FY22 annual report that the inauguration of Aurika, Mumbai in CY23 will further boost performance.

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