Lemon Tree Hotels IPO Review, Should You Invest?

Lemon tree hotels (LTHL) has announced to open its initial public offerings (IPO) of 18,54,79,400 equity shares, with price band of Rs. 54-56 per share on Monday, March 26 2018. Lemon tree hotels IPO comprises offer for sale. The equity shares of the company are proposed to be listed in NSE and BSE.

Lemon tree hotels business profile

The hospitality chain Lemon tree hotels (LTHL) was founded in year 2002.  Delhi based Lemon tree is third largest hotel in terms of controlling interest in owned and leased rooms as of June 30, 2017. It operates in mid-priced hotel sector which consists of three segments- upper mid-scale, mid scale and economy hotel.

LTHL had opened its first hotel in year in May 2004 with 49 rooms. And, as of January 31, 2018, it had 4,697 rooms in 45 hotels across 28 cities in India.

LTHL’s Hotels located in NCR, Hyderabad, Chennai, Bangaluru, Ahmadabad, Indore, Jaipur etc.

Company operates under three brands: Lemon tree premier, Lemon tree hotels, Red Fox by lemon tree hotels.

#LemonTreeHotels won the FT ArcelorMittal Boldness in Business Award for Corporate Responsibility/Environment for hiring differently-abled people. @AradhanaLal, VP-Sustainability received the award.#FTBoldness #CSR #Sustainability #Disability #Ability #Inclusion #Diversity pic.twitter.com/ojrUinKvK3

— Lemon Tree Hotels (@LemonTreeHotels) March 17, 2018

Key dates of LTHL IPO

• Issue closing date: 28^thMarch, 2018
• Face value: Rs. 10
• Minimum lot: 265 shares
• Issue constitutes: 23.58%
• Retail portion:35%
• Finalization of basis of allotment: On or before 4^th April 2018
• Initiation of refunds: On or before 5^th April 2018
• Credit of equity shares: On or before 6^th April 2018
• Listing date: On or before 9^th April 2018

Purpose of Lemon Tree IPO

Company is not going to receive any proceed from the offer for sale (OFS) by selling shareholders. However,

• LTHL will get benefits of listing of the equity shares in NSE and BSE.

Valuation parameter

On financial front, from FY 2015 to FY 2017, we can see revenue/net profit for FY 2014 is Rs.222.96 cr. / Rs.  (39.31) cr., FY 2015 is Rs. 291.58 cr. / Rs. (63.23) cr., for FY 2016 Rs. 370.07 cr. / Rs.  (29.80) cr., for FY2017, Rs. 418.14 cr. / Rs.  (7.17) cr. and for 1HY 2018, Revenue is Rs.352.88 cr. and net profit is Rs.2.85 cr.

For last three fiscal years it has posted EPS of Rs. (0.30)

Should you invest in Lemon tree hotels IPO?

Recent Listing gain of Tasty dairy specialties Ltd. was 7.44% and its total profit above issue price was 0.89%. Hindcon chemicals Ltd .total profit above issue price was 0.18%.

Lemon tree hotels ltd. is showing negative earnings from last four years except first half of current fiscal. So, in my opinion Lemon tree hotels IPO should be avoided by the investors. Yes, if company’s performance does better in coming years, you can again think for it.