Lemon Tree Hotels Share price and Fundamental Analysis

Company History

Lemon Tree Hotels (LTH) was incorporated on June 02, 1992. The Company is engaged in the business of developing, owning, acquiring, renovating, operating, managing and promoting hotels, motels, resorts, and restaurants. The company has added 723 rooms in 9 hotels across 8 cities and presently operates 56 hotels in 33 cities with ~5,525 rooms. With these new hotels, it expanded the geographical presence to Srinagar, Baddi, Lucknow and Amritsar. The name of the company was changed to 'Lemon Tree Hotels Private Limited' on 10 June 2010. During the FY 2018, the Company has 13 direct subsidiary companies and 8 indirect subsidiary companies.Lemon Tree hotels are located across India, in metro regions, including the NCR, Bengaluru, Hyderabad and Chennai, as well as tier I and tier II cities such as Pune, Ahmedabad, Chandigarh, Jaipur, Indore and Aurangabad Due to the dynamic and evolving nature of Indian guests' expectations and based on its market research, it has created three brands in order to address these three hotel segments:

Lemon Tree Premier' which is targeted primarily at the upper-midscale hotel segment catering to business and leisure guests who seek to use hotels at strategic locations and are willing to pay for premium service and hotel properties;

Lemon Tree Hotels' which is targeted primarily at the midscale hotel segment catering to business and leisure guests and offers a comfortable, cost-effective and convenient experience; and

Red Fox by Lemon Tree Hotels' which is targeted primarily at the economy hotel segment.

The company's Promoter, Mr. Patanjali Govind Keswani has approximately three decades of experience in the hotel and hospitality industry. He has demonstrated ability to manage and grow its operations organically and also by acquiring and integrating hotels. The Company's shareholders include marquee investors such as funds affiliated with Warburg Pincus and APG, a Netherlands based asset manager of pension funds.

In 2004, the company opened first its Lemon Tree Hotel' in Gurugram, Haryana. In 2006, Maplewood Investment Ltd (fund affiliated to Warburg Pincus) made investment in the company. In 2008, Citron Limited made investment in the company. In 2009, the company opened the first 'Red Fox' hotel in Jaipur, Rajasthan.

In 2010, the company opened the first 'Lemon Tree Premier' hotel in Leisure Valley, Gurugram, Haryana.

On the conversion of the company to a public limited company pursuant to a resolution passed by the shareholders on September 29, 2012, the name of the company was changed to 'Lemon Tree Hotels Limited' on October 22, 2012.

In 2012, APG Strategic Real Estate Pool N.V. made investment in the company. During the year under review, the company commenced the business of management of hotels through its subsidiary Carnation Hotels Private Limited.

In 2015, APG made investment in the company's two subsidiaries Nightingale Hotels Private Limited and Begonia Hotels Private Limited.

On 22/09/2017 the company filed Draft Red Herring Prospectus and on 19/03/2018 filed Red Herring Prospectus with SEBI for raising Rs. 1038.68 cr. The Issue dates were from 26/03/2018 to 28/03/2018 with Price Band of Rs. 54 to Rs. 56. The Issue got subscribed 1.14 times leading to its Issue Price being fixed at Rs. 56. The Shares got listed in BSE and NSE on 09/04/2018 at Rs. 61.60 which is 10% above Issue Price.

On 8 June 2018, Lemon Tree Hotels informed the stock exchanges that the company's subsidiary company 'Iora Hotels Private Limited'('IORA') has received final pre-construction approval i.e Consent to Establish from Maharashtra Pollution Control Board for commencing construction of its 577 rooms & suites property with large convention center to be opened under the Company's brand 'Lemon Tree Premier' located next to Mumbai International Airport, Mumbai, which is the most demand dense and highest barrier to entry hotel market in India. The groundbreaking i.e start of construction shall commence on 10th June 2018.

On 6 September 2018, Lemon Tree Hotels informed the stock exchanges that it has signed a License Agreement for a 60-room property including 15 luxury tents at Ranthambore, Rajasthan under the Company's brand 'Lemon Tree Premier'. The Hotel is expected to be operational by September 2020. Carnation Hotel Private Limited, the hotel management arm of the Company will be operating and marketing this Hotel.

On 16 October 2018, Lemon Tree Hotels informed the stock exchanges that it has signed a License Agreement for a 70-room property located near BKC, Mumbai under the Company's brand 'Lemon Tree Hotel'. The Hotel is expected to be operational by June 2019. Carnation Hotel Private Limited, the hotel management arm of the Company will be operating and marketing this Hotel. This Hotel is addition to the two (2) other upcoming owned hotels of the Lemon Tree Group in Mumbai with a combined inventory of approx 1000 rooms.

Lemon Tree Hotels came out with an initial public offer (IPO) of 185,479,400 equity shares of face value of Rs 10 each of the company for cash at a price of Rs 56 per equity share aggregating to Rs 1038.68 crores during the period from 26 March 2018 to 28 March 2018. The offer for sale was of 94,500,053 equity shares aggregating to Rs 529.20 Crores by Maplewood Investment Ltd, 25,320,584 equity shares aggregating to Rs 141.79 Crores by RJ Corp Limited, 13,999,416 equity shares aggregating to Rs78.40 Crores by Ravi Kant Jaipuria and sons (huf), 6,986,180 equity shares aggregating to Rs 39.12 Crores by Whispering Resorts Private Limited, 883,440 equity shares aggregating to Rs 4.95 Crores by swift Builders Limited, 23,649,816 equity shares aggregating to Rs 132.44 Crores by Five Star Hospitality Investment Limited, 19,159,911 equity shares aggregating to Rs 107.30 Crores by Palms international Investments Limited, 480,000 equity shares aggregating to Rs 2.69 Crores by Mr. Satish Chander Kohli and 500,000 equity shares aggregating to Rs 2.80 Crores by Mr. Raj Pal Gandhi, the selling shareholders. There was no fresh issue of shares by the company. The IPO was priced at Rs 56 per equity share.

During the Financial Year under review, the Company initiated the process of Initial Public offering of 185,479,400 equity shares of face value of Rs 10 each of the Company through an Offer For Sale (Offer) by the Selling Shareholders and Offer has been subscribed 1.19 times with great interest shown by Institutional investors which include key foreign institutional investors as well as major domestic mutual funds of the Offer. The Company completed the process of Initial Public Offer and the Company's equity shares got listed on the National Stock Exchange of India Limited (NSE) and BSE Limited on April 9, 2018.

During the Financial Year under review, as a part of Company's restructuring plan, the Board of Directors had approved the Scheme of Amalgamation of Aster Hotels & Resorts Private Limited, PRN Management Services Private Limited, Headstart Institute Private Limited (together 'the Transferor Companies') with Lemon Tree Hotels Limited ('the Company') u/s 230 to 232 of the Companies Act, 2013 and scheme has been duly approved by the National Company Law Tribunal (NCLT) vide its order dated December 22, 2017 and the scheme became effective from December 28, 2017. Investment has been nullified with effect from the Appointed date i.e. April 01,2017. Pursuant to Scheme, the Company has made the allotment of 56,511,722 equity shares to the shareholders of the Transferor Companies and equivalent shareholding held by the Transferor Companies in the Company stands cancelled.

In Apr' 19, Company added about 2,600 rooms in 26 hotels across 16 cities. In Jun'20, it raised Rs 175 crores in Fleur Hotels Private Limited, a material subsidiary of the Company.

During the year 2019-20, the Company, through its material subsidiary, Fleur Hotels Private Limited acquired 100% shareholding of Berggruen Hotels Private Limited on 1st November, 2019 and accordingly it has become wholly owned subsidiary of Fleur Hotels Private Limited and indirect subsidiary of Lemon Tree Hotels Limited.

During the year 2020-21, the Company acquired the shareholding of Hamstede Living Private Limited from Magnolia Grove Investment Ltd and it became a subsidiary of the Company w.e.f March 31, 2021.

During the year 2020-21,, Begonia Hotels Private Limited and Nightingale Hotels Private Limited, subsidiaries of the Company merged into Fleur Hotels Private Limited, material subsidiary of the Company w.e.f March 31, 2021.

During Financial Year 2022-23, a wholly owned subsidiary of the Company viz: Totally Foxed Solutions Private Limited was incorporated. The Company acquired a 25.10% shareholding of Carnation Hotels Private Limited and thereafter Carnation Hotels Private Limited was made a Wholly Owned Subsidiary of the Company.