Ripples Advisory, Lemon Tree offer expensive, suitable for high-risk investors
Investors with appetite for high risk may consider investing in the initial public offering (IPO) of Delhi-based mid-sized hotels company Lemon Tree Hotels.
The capital-intensive nature of its business, asset-heavy model and high valuation with respect to the listed peers are a few reasons which make the company’s public offer an expensive proposition.
THE ISSUE
The issue is purely an offer for sale of 185,479,400 shares which would result in the exit of strategic investors such as Maplewood, Whispering Resorts, Palms International and RJ Corp.
BUSINESS
Lemon Tree Hotels offers rooms in three categories. These are Lemon Tree Premier (upper midscale), Lemon Tree Hotels (midscale) and Red Fox (economy segment). The average occupancy of its rooms is 77 per cent.
FINANCIALS
In the four fiscals to FY17, the company’s total revenue grew by 17per cent annually to Rs 418 crore. It incurred losses during the period. For the first nine months of FY18, the company posted net profit of Rs 2.9 crore.
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