Lemon Tree Hotels IPO Subscribed 25% On Day 1: Key Things To Know

Lemon Tree Hotels' IPO finished Day 1 with a subscription of 25 per cent. Lemon Tree Hotels, a hospitality chain, is offering 12,98,35,580 equity shares. Lemon Tree Hotels has fixed a price band of Rs 54 and Rs 56 per share. At the lower end of the price band, the company will raise around Rs 1,000 crore, and around Rs 1,040 crore at the higher end. Its shares will be listed on NSE and BSE. At the end of the first day, the Lemon Tree Hotels IPO was subscribed 25 per cent, with 3.26 crore bids, data from the National Stock Exchange (NSE) showed. Lemon Tree Hotels operates in the mid-priced hotel sector, consisting of the upper-midscale, midscale and economy hotel segments, with brands Lemon Tree Premier, Lemon Tree Hotels and Red Fox by Lemon Tree Hotels respectively.

Here 7 things to know about Lemon Tree Hotels IPO:

1. Of the 12.98 crore shares on offer, 3.71 crore are reserved for qualified institutional buyers, 2.78 crore for non-institutional investors and 6.49 crore for retail investors.

2. Bids for the Lemon Tree Hotels IPO can be made for a minimum of 265 units and in multiples of 265 thereafter.

3. Lemon Tree Hotels opened its first hotel with 49 rooms in May 2004. It operated 4,697 rooms in 45 hotels (including managed hotels) across 28 cities in India as of January 31, 2018. The company seeks to cater to Indian middle class guests and deliver differentiated yet superior service offerings, with a value-for-money proposition.

4.    In the first six months of the current financial year, Lemon Tree Hotels reported a net profit of Rs 12.6 crore over total income of Rs 174.3 crore.

5.    Kotak Mahindra Capital Company Limited, CLSA India Private Limited, J. P. Morgan India Private Limited and Yes Securities (India) Limited are the book running lead managers of the IPO.

6.    Lemon Tree Hotels saw subscription of 55,643,820 equity shares, worth Rs 311.6 crore, by 18 anchor investors on Friday.

7.    Risks: Lemon Tree Hotels has listed the following among risk factors:

i. The price/earnings ratio based on diluted Earnings Per Share (EPS) on restated consolidated basis for FY17 for the issuer is not measurable as EPS is negative as compared to the average industry peer group Price-Earnings Ratio (PE) ratio of 90.6.

ii. The four merchant bankers associated with the offer have handled thirty six public issues in the past three years, out of which twelve issues closed below the issue price on listing date.

iii. The average cost of acquisition of equity shares for the selling shareholders is in the range of Rs 4.17-Rs 17.18 per equity share and the offer price at upper end of the price band is Rs 56.

iv: Weighted average return on net worth for last three financial years on restated consolidated basis is negative, at -1.89 per cent.