Lemon Tree has also forayed into the international market with the addition of a 114-room property in Dubai. Both agreements are management contracts for running the hotels, which is in line with the company’s asset-light strategy. This allows the company to grow at a steady pace, improve operating profit margins, and maintain a lean balance sheet.
While its overall inventory has increased 16 per cent in the FY15-19 period, managed hotel rooms have grown 61 per cent. About a third of its 5,800-plus rooms (excluding the Keys acquisition) are managed.
At the current price, the stock is trading at 44 times its FY21 estimates which is on the higher side. Investors can buy the stock on dips.
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