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‘Cheap’ stock is great; Lemon Tree becomes a wealth creator in a falling market, can get 34% return even further

Lemon Tree Hotels: Even though the stock market has seen a significant decline in the last 1 year. During this period, some stocks have proved to be wealth creators for the investors. Among these, a share related to the hotel industry is Lemon Tree Hotels. This stock has given 53% return in 1 year. At the same time, more than 36 percent has come in the stock this year too. Looking at the revival in the hotel business, brokerage house Motilal Oswal is bullish about it. The brokerage expects higher returns in the stock going forward and said that the company is in a strong position to take advantage of the revival in the Indian hospitality sector.

Earnings made to investors even in difficult times

Lemon Tree Hotels has made investors earn even in tough times. During 1 year, the share price has increased from Rs 43 to Rs 66. That is, even when the market was cracking, those who put money in it got about 53 percent returns. The 1-year high for the stock is Rs 71, which was shown in June this year. At the same time, the take of 1 year is Rs 36.

Expected 34 percent return even further

Brokerage house Motilal Oswal has given investment advice in Lemon Tree Hotels. The brokerage has set a target of Rs 86 for the stock. Whereas the current price is Rs 66. In this sense, it can get a further 34 percent return. The brokerage says that after Kovid 19, revival is being seen in the hotel sector. Activities related to the hotel sector are increasing. The company is in a strong position to take advantage of this revival. The company’s presence in the mid-price hotel segment makes it strong. The company has increased the number of hotel rooms. Booking rates have improved.

business travel pickup

According to the brokerage, pickup is being seen in business travel. 86 percent of Lemon Tree Hotels are located at business destinations. After Kovid 19, the hotel room occupancy rate is 71.5 percent. The company has a total of 4300 hotel rooms, in which an average of 3100 rooms are being occupied at present. Along with business travel, the company is also benefiting from the improvement in international travel. The brokerage estimates that the revenue and EBITDA CAGR of Lemon Tree Hotels during FY22-24E may be 51 percent and 84 percent. At the same time, RoE is also expected to improve to 9.3 percent in FY24. However, if there is a wave of Kovid again ahead and there is a delay in capex, then both of these can be risk factors.

(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of digitnews. Markets are risky, so take expert opinion before investing.)

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