Lemon Tree Hotels: Gaining ground

The stock of Lemon Tree Hotels rallied around 8.5 per cent last Friday on news that the company had tied up with private equity firm Warburg Pincus to develop co-living and rental housing projects.

The partners plan to invest ₹3,000 crore in the business, half of it now. Lemon Tree’s share in the venture is 30 per cent. This new business is under-explored in India and could be a good growth driver in the years ahead.

With last week’s rally, the Lemon Tree stock has gained about 33 per cent since its IPO in April, placing it among the best performers in a weak market.

This good show has been driven by strong operational and financial performance, making good use of the upcycle in the hotel industry and the company’s strong position in the lucrative mid-market space. The stock trades at about 53 times EV/EBITDA now, lower than the 80 times in August.

 

ALSO READ: Lemon Tree Hotels - In a comfortable space: Buy

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