- 31 May 2023
- ICICI Securities
Lemon Tree Hotels reports best ever EBITDA margin in Q4FY23
LEMONTREE - 145 Change: 6.30 (4.56 %)News: Lemon Tree Hotel’s revenues grew 111% YoY to Rs 252.7 crore (up 8% QoQ). It was also up 43% from pre-Covid levels (ie. Q4FY20). The total operating costs were down significantly from 64% of sales in Q4FY20 (pre-Covid) to 45% of sales in Q4FY23. On absolute basis, operating costs remained flattish compared to pre-Covid levels. This led to sharp EBITDA margin expansion of ~1906 bps to 55.4% (vs. our estimate of 54%) from pre-Covid levels. It was up 120 bps sequentially. PAT improved to Rs59 crore in Q4FY23 vs. net loss of Rs 39 crore last year and net loss of Rs 19 crore during Q4FY20.
Views: Demand from corporate travel remains healthy and is the highest contributor to room nights sold with 38% share. The company is planning to spend 2-2.5% of its revenues on renovating the existing hotel portfolio, particularly , the keys hotel portfolio. The management expects the renovations to enable the company to fetch higher average room rates, going ahead, and better positions the company to capture the expected demand. Further, increase in the management and franchised portfolio will help the company generate higher fee based income, going forward, become asset light and gradually improve return ratios.
Impact: Positive