This share can go up to ₹ 130: Domestic travel and hospitality boom will open the way for profit, brokerage advised buying; Know the target

New Delhi. The demand in the Indian hospitality and aviation sector seems to be reaching its peak due to the upcoming festive season, wedding months and corporate travel. Mid-market and budget-premium hotel chains are directly benefiting from this structural change in domestic tourism. Meanwhile, major brokerage houses and market analysts have commented on the shares of hotel sector giants. Lemon Tree Hotels Ltd But he has reiterated his positive outlook. According to brokerage reports, the stock is expected to rise in the coming times on the back of domestic travel demand, rising daily room rentals (ARR) and aggressive hotel expansion plans. till ₹130 level could reach.

The company has seen a steady improvement in its financial results and operating margins in recent quarters. The addition of new rooms, especially in Tier-2 and Tier-3 cities, and the ‘Asset-Light’ (Management Contracts) model adopted by the company have made its balance sheet quite flexible. This is why market experts are considering this stock an attractive bet from a medium to long term perspective.

The trend of ‘staycation’, spiritual tourism and destination weddings has increased rapidly during holidays in India. Occupancy rates of hotels in major tourist centers like Ayodhya, Varanasi, Jaipur, Goa and Rishikesh remain above 70% to 75%.

Lemon Tree Hotels is one of the largest mid-priced hotel chains in the country. The company has a balanced portfolio of brands such as ‘Aurika’ (Upscale), ‘Lemon Tree Premier’, ‘Lemon Tree Hotels’ and ‘Red Fox’ (Economy). The majority of the company’s revenue comes from domestic business travelers and family vacationers, so international geopolitical turmoil or a lack of foreign tourists has very limited impact on its core business.

Market analysts have highlighted the following solid points behind Lemon Tree’s valuation and growth projections:

1. Jump in Average Daily Room Rate (ARR): The company’s RevPAR (Revenue Per Available Room) is continuously increasing. An additional increase of 10% to 15% in room rents during festive and wedding seasons will directly support the operating margins.

2. Focus on Management Contracts (Asset-Light Model): The company is now moving away from the heavily indebted model of buying land and building hotels and focusing mainly on management and franchise contracts. This reduces capital expenditure (Capex) and increases free cash flow rapidly.

3. Gradual reduction in debt: The company is using the profits generated from its operations to repay its existing debt, which will reduce the interest cost and expand the net profit (PAT).

4. Performance of ‘Aurica Mumbai’: ‘Aurica’, the mega luxury hotel opened near Mumbai International Airport, is now in stable operational condition, contributing significantly to the company’s top-line revenues.

On technical charts, the stock is consolidating above its key moving averages (50-DMA and 200-DMA). According to experts, if an investor buys in a phased manner around the current levels or on dips of ₹105-₹108, there is a strong possibility of achieving the target of ₹130 in the next 6 to 12 months.

It is essential to assess the risks in any investment. In the case of Lemon Tree, investors should keep an eye on these things:

• If there is an unexpected slowdown in the domestic economy or consumption demand, corporate travel budgets may be cut.

• The expansion of Tata Group’s ‘Indian Hotels’ (Taj/Ginger) and other international hotel chains is increasing competition in the budget-premium segment.

• If there is any delay in the commissioning of new pipeline hotels, it could impact short-term estimates.

(Disclaimer: This report has been prepared for educational and informational purposes only. Any investment in the stock market is subject to market risks. Be sure to consult your certified SEBI-registered financial advisor before deciding to invest in any shares.)