Share price of Lemon Tree Hotels jumped over 5 percent in morning trade on December 5 after foreign brokerage CLSA gave a buy rating on the stock with a target price of Rs 80.
CLSA said its channel checks suggest Q3FY20 has been strong for hotels. In Mumbai, Hyderabad and Delhi, occupancy levels have already exceeded 70 percent.
“Increasing occupancy level is setting the base for ADR hikes, going ahead and we expect a slow but steady ADR Improvement,” said CLSA.
CLSA believes, for the company, share of lucrative markets like Mumbai is expected to increase.
Shares of Lemon Tree are trading at premium valuations but CLSA does not see it as a concern.
“Premium valuation is justified given its high-growth plans and we expect mid to high single-digit ADR hikes for the company in Q3,” CLSA said.
Shares of Lemon Tree traded 2.69 percent up at Rs 62.90 on BSE around 14:45 hours IST.
News Source: Moneycontrol