Mehabe score: 2 G Factor: 3 Piotski Score: 6 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 6.
Description
Lemon Tree Hotels Ltd is largest mid-priced and the third largest overall hotel chain in India. It operate 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.#
Main Points
Hotel Portfolio
Presently, the company operates a network of 84 hotels with ~8,300 beds in operations.
List of hotel brands with hotels in operations:-#
Aurika – 1
Lemon Tree Premiere – 17
Lemon Tree Hotel – 38
Red Fox Hotel – 12
Keys – 16Site:LEMONTREE
Market Cap:
Rs 3,327 cr
Price:
42.0
Trading pe:
x
Book-value:
10.4/share
Div yield:
0.00 %
Earning yield:
-0.06%
Face-value:
10.0/share
52week high:
49.50
52week low:
22.50
Technical Analysis
Stock trades at 42.0, above its 50dma 39.76. It also trades above its 200dma 37.55. The stock remains bullish on techicals
The 52 week high is at 49.50 and the 52week low is at 22.50
Price Chart
P/E Chart
Sales and Margin
Strengths
–
Weakness
– Stock is trading at 4.04 times its book value
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -7.31% over past five years.
-Promoter holding is low: 25.88%
– has a low return on equity of -2.88% for last 3 years.
-Debtor days have increased from 52.13 to 72.89 days.
-Promoter holding has decreased over last 3 years: -5.19%
Competition
– The industry trades at a mean P/E of 56.0x. Indian Hotels Co trades at the industry’s max P/E of 0.0x. LEMONTREE trades at a P/E of x
– Industry’s mean G-Factor is 2.6 while the mean Piotski score is 7.0. LEMONTREE has a G-Factor of 3 and Piotski scoreof 6.
– Average 1 month return for industry is 23.9%. The max 1- month return was given by Barbeque-Nation: a return of 46.11 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 95.0 cr compared to Rs 176.0 cr for period ended Mar 2020, a fall of 46.0%
Operating Profits reported at Rs 26.0 cr for period ended Mar 2021 vis-vis 63.0 for period ended Mar 2020 .
Operating Margins contracted -842.7 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs -0.21 compared to Rs -0.39 for previous quarter ended Dec 2020 and Rs -0.23 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 252.0 cr for period ended Mar 2021 vis-vis sales of Rs 669.0 cr for the period ended Mar 2020, a fall of 165.5%. The 3 year sales cagr stood at -19.6%.
Operating margins shrank to 23.0% for period ended Mar 2021 vis-vis 35.0% for period ended Mar 2020, contraction of 1200.0 bps.
Net Profit reported at Rs -127.0 cr for period ended Mar 2021 vis-vis sales of Rs -10.0 cr for the period ended Mar 2020, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -15.0% compared to -3.0% over the last 3 Years. – The stock has given a return of 38% on a 1 Year basis vis-vis a return of -18% over the last 3 Years. – The compounded sales growth on a TTM bassis is -62% vis-vis a compounded sales growth of -20% over the last 3 Years. – The compounded profit growth on a TTM basis is -7534% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 22.83% vis-vis 22.5% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 35.72% vis-vis 35.63% for Dec 2020
Conclusion
– – Stock is trading at 4.04 times its book value
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -7.31% over past five years.
-Promoter holding is low: 25.88%
– has a low return on equity of -2.88% for last 3 years.
-Debtor days have increased from 52.13 to 72.89 days.
-Promoter holding has decreased over last 3 years: -5.19%
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 39.76 and is trading at 42.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
