Lemon Tree Hotels - Q1FY21 First Cut - ICICI Securities

(CMP: Rs. 24; MCap: Rs. 1,889 crore)

Lemon Tree reported weak set of numbers for Q1FY21 as hotels business were severely affected by lockdowns, corporate travel restrictions amid ongoing pandemic environment. However, company managed to report EBITDA though at negligible level due to stringent cost control measures initiated during the quarter against our expectations of EBITDA loss for the quarter.

Q1FY21 Earnings Summary

- Revenues for the quarter declined 71.1 % YoY to Rs. 40.7 crore (vs. I-direct estimate of Rs. 43.7 crore) as only 71% of company's inventory was operational. Occupancy in operational hotels was recorded at 40.4% resulting into average occupancy of 28.9% for the quarter. Average room rates were also down by 34.4% YoY to Rs. 2626/room. The key demand segments for our business were Indians returning from abroad under Vande Bharat Mission opting for institutional quarantine, global IT majors for their business continuity planning teams and on duty doctors and paramedical staffs.

- Total expenses stood at Rs. 36.3 crore in Q1FY21, down 62.2% YoY as compared to Rs. 96.2 Cr in Q1FY20. EBITDA decreased by 90.2% YoY from Rs. 44.8 crore in Q1 FY20 to Rs. 4.4 crore in Q1 FY21 (vs I-direct estimated EBITDA loss of Rs. 3.9 crore). The resultant EBITDA margin came in at 10.7% vs 31.8% reported last year.

- With sharp increase in the interest costs (up 57.5% YoY to Rs. 48.7 crore), company reported net loss of Rs. 60.5 crore (vs I-direct estimated net loss of Rs. 50.2 crore)

Since June there has been a gradual lifting of curbs on hotel operations and under Unlock 3.0, hotels are now allowed to open in almost all states. With 85.5% of company's owned/leased inventory are operational as of June compared to 57.5% in April, we expect slight but visible pick-up in demand from MSME sector. However, on the liquidity and debt front, we remain cautious on the company from medium term perspective. We would be coming out with a detailed report post the conference call.

Shares of Lemon Tree Hotels Ltd was last trading in BSE at Rs.23.85 as compared to the previous close of Rs. 23.8. The total number of shares traded during the day was 30370 in over 251 trades.

The stock hit an intraday high of Rs. 24 and intraday low of 23.6. The net turnover during the day was Rs. 721794.

Source : Equity Bulls

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