Lemon Tree makes a decent debut on the bourses, list price at 10% more than issue price

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Lemon Tree Hotels debuted on the bourses and made a decent entry as the scrip was listed at Rs.61.60 on the BSE, marking a 10% premium over the issue price of Rs.56.

Lemon_Tree
Lemon Tree Hotels debuted on the bourses and made a decent entry as the scrip was listed at Rs.61.60 on the BSE and NSE, marking a 10% premium over the issue price of Rs.56.

The largest hotel chain in the mid-priced sector of India saw the scrip listed at the same price on NSE as well.

Lemon Tree ended its IPO (initial public offering) last week which saw an overall subscription of 1.19 times. The price range of the IPO was set at Rs.54 to Rs.56 per share. The QIB quota saw a subscription of 3.88 times. The NII (non-institutional investors) and the retail categories witnessed bids at 0.12 times each.

Lemon Tree began operations in May 2004 with its first hotel of 49 rooms. By 31 January this year, it grew to to 45 hotels holding a total of 4,697 rooms across 28 cities in the country. This includes managed hotels. Lemon Tree boasts of having 6,62,992 members enrolled in its loyalty programme “Lemon Tree Smiles” as on 31 January, and the number continues to grow.

According to the Howrath Report, Lemon Tree Hotels ranks ninth among the largest hotel chains in India in terms of the number of rooms owned, managed and leased as on 30 June 2017. The chain functions within the mid-priced hotel sector which consists of economy, midscale and upper-midscale segments of hotels.

Based on its market research on the dynamic needs of Indian guests and their evolving expectations, Lemon Tree created three brands: Lemon Tree Premier for upper-midscale and business segment, Lemon Tree Hotels for midscale segment, and Red Fox by Lemon Tree Hotels for the economy segment.

The enterprise value (EV) of the company is estimated to be 43 times and 40 times the FY17 and FY18 EBITDA (Earnings before interest, tax, depreciation and amortization) respectively.

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